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EMV Chip Cards and Credit Card Fraud

Europay, MasterCard and Visa (EMV) chip cards are a huge hit in the retail world. They reportedly prevent credit card fraud, helping to make point-of-sale transactions more secure.

Unlike traditional swipe-and-sign credit cards, EMVs come with embedded chips that assign a unique ID to every purchase. Below are two standards, with additional information here.

  • With chip & signature cards, the customer must sign his or her name to complete a transaction.
  • With chip & PIN cards, the customer must include a personal identification number (PIN) to authorize a purchase.

But are these security features just hype? Or do EMV chip cards truly offer greater protection?

Do EMV Chip Cards Really Prevent Credit Card Fraud?

It's worth noting that no payment option is 100 percent secure — not even cash. But according to Andi Coleman (of the Accredited Standards Committee X9), "It's very difficult if not impossible to clone the (chip and PIN) card." And the Aite Group’s Julie Conroy adds that, "These new and improved cards are being deployed to improve payment security, making it more difficult for fraudsters to successfully counterfeit cards."

But then again, quotes from industry insiders don’t really prove anything.

For evidence, we need to look at the numbers. Here are some hard, cold facts that every retailer in the United States should probably note:

  • After embracing chip & PIN cards, the U.K. witnessed credit card fraud go from $356 million in 2004 to less than $100 million by 2008.
  • The U.S. is responsible for roughly 25 percent of global credit card use, but nearly 50 percent of all credit card fraud. What makes these statistics so interesting is that the U.S. is also the only major market on the planet where EMV credit cards aren’t yet mainstream.

Based on the above, it appears that EMV chip cards are more secure. With traditional swipe-and-sign credit cards, it’s relatively easy for thieves to remember the 16-digit credit card number (or clone the magnetic strip on the back). But with chip-enabled credit cards, you must have the plastic in hand in order to successfully complete a transaction.

Should Your Retail Store Invest in EMV Credit Card Readers?

The numbers don’t lie. But is this added security worth the investment? After all, retailers must buy additional equipment in order to read chip-enabled credit cards.

It’s ultimately a personal decision — albeit an incredibly easy one.

You can think about it this way. In a world where EMVs exist, magstripe credit cards are pretty easy targets.

By investing in EMV credit card readers, you can erect extra hurdles between shoppers and would-be thieves. The end result is:

  • Fewer losses (for both you and your customers)
  • More sales (i.e. higher consumer confidence)

Using EMVs to Prevent Credit Card Fraud at Your Store

To learn more about EMV chip credit cards, use the free resources below:

  • For more information about EMV chip-enabled cards, click here.
  • For more about credit card processing at BluePay, click here.
  • For tips on avoiding credit card fraud, click here.

Topics: EMV, Payment Technology, PCI Compliance and Fraud Prevention

Welcome to the BluePay Blog!

Whether you're a small business, an enterprise corporation, a financial institution, or a software partner, we have created a series of blog posts to help you and your customers, learn more about the complex nature of payments. Take a look to learn how payments can help to simplify your business operation, and may even help to grow your revenue.

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