The reason for the EMV liability shift that went into effect about 18 months ago was to reduce the amount of card-present credit and debit card fraud in the U.S., and to get American payment infrastructure up to speed with the rest of the developed world. Places like Europe, Canada, Latin America and Asia have all had EMV as a commonplace payment platform for years or more, and already brick-and-mortar retailers in the U.S. are seeing similar benefits from the changeover.
There's plenty of evidence to suggest that the EMV liability shift led to reduced in-store payment fraud over the course of 2016 - the first full year the shift was in effect, according to new data from the credit bureau Experian. However, the discouragement at real-world checkout counters led thieves to take their tactics online instead, as e-commerce fraud jumped 33 percent from the level observed in 2015.
What Drove The Jump?
Even beyond the shift toward broader use of EMV, data also suggests that a 40 percent annual increase in the number of data breaches seen in the U.S. last year likely also played a key role in driving up online payment fraud. An increasing number of consumers have now had at least some of their payment details exposed in such a breach. Coupling that with the fact that EMV cards are far more difficult to duplicate than magnetic strips, it's no wonder e-commerce is taking the brunt of the fraud these days.
"Fraudsters that typically relied on committing counterfeit fraud have shifted their focus to the digital channels where they could have more success," Experian wrote in its findings. "As more fraud attackers enter a rapidly growing mobile and online commerce space, that makes it even more difficult for merchants to differentiate their good customers from the sophisticated fraud attackers."
Taking Global Examples
The efficacy of EMV when it comes to reducing physical fraud comes from Canada, where instances of skimming leading to fraud fell appreciably as chip cards gained traction there, according to the Interac Association. EMV technology rolled out in earnest across the Great White North in 2008, and in each of the seven full years since, instances of have card-present fraud have tumbled. In 2016, losses due to skimming led to just $11.4 million; amounting to just 0.003 percent of all charges across the company's debit network.
As more devices are required to come with EMV capabilities in the U.S. - from gas pumps to ATMs - the market for these machines is only going to grow in the years ahead. To this end, it seems that the market for EMV-enabled point-of-sale devices is expected to grow appreciably over the next few years, rising at a compound annual growth rate of 9.9 percent from this year to 2021, according to Technavio.
Merchants of any size should now strive to make sure they're prepared to adopt EMV-ready POS devices as soon as possible, both to meet growing use among consumers and ensure a safer payments ecosystem overall.