Card fraud drops in Europe, EMV gains ground
January 17, 2012
Credit card fraud has been a main source of headaches for corporate financial departments as well as consumers, but certain card technologies are successfully decreasing the threat, FICO recently announced.
The analytics company reviewed 55 million active credit cards in its FICO Falcon Fraud Consortium for Europe. Its research showed that between March 2009 and March 2011 alone, counterfeit fraud had fallen 60 percent.
"Chip and PIN technology has radically driven down counterfeit and other forms of 'card present' fraud in the U.K., which just three years ago accounted for some 60 percent of Europe's credit card fraud," stated Martin Warwick, FICO's fraud chief in Europe, Africa and the Middle East. "In response, criminals are operating across borders, targeting countries such as Germany that have weaker detection and prevention capabilities, and shifting their attention to card-not-present schemes such as online fraud."
Card-not-present fraud continues to dominate the issue, and is responsible for 72 percent of total fraud losses and 69 percent of the accounts that are targeted by criminals.
While the chip-and-PIN technology has been a popular choice for card issuers in Europe and Asia, the security measure has yet to gain popularity in the United States. However, some groups, including Visa, are pushing hard to get more banks, financial institutions, merchants and consumers to embrace the cards.
"There's growing consensus in the industry that it makes a lot of sense to encourage investments in chip technology," wrote Stephanie Ericksen, Visa's head of authentication product integration, on the corporate blog. "That's because it adds a layer of safety to transactions, through the use of dynamic authentication, as well as enhances international card acceptance. And it helps to build an acceptance infrastructure to support mobile payments."
Earlier this month, Visa issued a list of recommended practices for bringing the EMV chip card to American shores. The company advises that merchants, acquiring processors and merchants get involved in EMV early on, which involves making sure the POS terminal and the acquirer are both able to send and recieve full chip data.
Additionally, merchants that are configuring their EMV chip terminals will need to make sure that the hardware is only supporting online options - there's no need to run offline data authentication or other functions, and solely authorizing online will make EMV compliance earlier, Visa says.
Although EMV has not achieved wide use in the U.S. yet, neither has another payment technology that has promised to bring increased security and convenience: the mobile wallet.
Robert Siciliano, a personal security expert, writes for Blogger News that the two options have competed for first place for many years. He points to the heavy investing in both EMV and the mobile wallet, and argues that there is "more than enough room" for both technologies - their adoption does not have to be mutually exclusive.
While Google has put its weight behind the smartphone payments with Google Wallet and has networked aggressively to get payment companies and retailers involved, other companies have chosen to pursue both fields. Visa, he also notes, has been lobbying for EMV, but is encouraging investments in the other technology and its supporting infrastructure as well.
Siciliano quotes Visa's global head of product, Jim McCarthy, who vowed that the company would work to improve security, interoperability and mobile payments on an international scale.
"We are taking steps today to create a commercial framework that will support growth opportunities and create value for all participants in the payment chain," McCarthy added.
