Experts predict that by the end of 2014, nearly 8 percent of U.S. debit cards and 25 percent of credit cards will come equipped with chip-enabled EMV technology. And that by 2018, these numbers could approach 100 percent penetration.
The reason behind this national push for EMV credit cards?
Short for Europay, MasterCard and Visa, EMVs come with state-of-the-art security features that make credit card fraud much more difficult. The card must physically be present at the point of purchase, where shoppers must either:
- Sign their names in order to complete the transaction (with chip & signature EMV cards)
- Enter in a personal identification number (with chip & PIN EMV credit cards)
These extra security steps explain why EMV technology has already become the standard worldwide. As new liability laws go into effect in 2015, American credit card issuers and merchants are rushing to phase out traditional swipe & sign payment technologies in favor of more secure EMV options.
But although EMVs are extremely effective at preventing in-store fraud, reducing online counterfeit activity remains a serious hurdle. In fact, Aite Group predicts that online credit card fraud could double to $6.4 billion by 2018.
Explaining the Rise in Online Credit Card Fraud
Once the United States approaches 100 percent EMV penetration, the technology will become a truly global standard. So why would online credit card fraud rise as shoppers worldwide embrace this more secure payment option?
There are a couple potential explanations for this spike:
- EMV security features don't really apply to the online world. The chip embedded in each card must be physically inserted into a terminal when making purchases at a retail store. But when shopping online, most merchants only require a credit card number, expiration date and address.
- Online shopping continues to grow at an explosive rate. In 2012, for example, e-commerce sales represented over $180 billion. And by 2018, that number could exceed $400 billion.
Taken together, the predicted increase in e-commerce credit card fraud isn’t that surprising. EMVs offer little protection from online hackers. And the number of “hacking” opportunities will surge as more shoppers turn to the Internet.
What Does This Mean for Online Retailers?
If EMV technology can't protect you and your shoppers from would-be thieves, what are your options?
First, you should still continue accepting credit cards online.
But you should also take extra precautions to keep you and your customers safe:
- Invest in a more secure online payment gateway. Although no payment option is perfect, you can create obstacles to slow down and deter credit card thieves.
- Make sure that your credit card payment systems are PCI compliant and follow the latest regulations.
- Learn how to recognize different types of credit card fraud.
- Take preventative steps to avoid credit card fraud, like requesting CVV codes during the payment process.
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