The ABCs of EMV – Part 3

The First Step On The Path To Reducing Payment Card Fraud

This is the third in 3-part series about EMV technology and how it helps keep sensitive data away from cyber-thieves.

Eighty countries around the world are in various stages of EMV technology adoption, and the evidence clearly shows that EMV technology reduces fraud.[1] The best evidence is in Europe, which has the highest EMV card adoption rate. For instance, fraud in the United Kingdom dropped 27 percent between 2007 and 2012, the years when EMV cards became widely accepted in that country.[1] EMV cards, however, do not entirely solve the problem. Although overall fraud drops in countries that adopt EMV technology, the percentage of fraud that occurs in card-not-present (CNP) transactions such as e‑commerce increases, sometimes by as much as 20 percent.[1] Why does this happen?

CNP transactions continue to be a weak link. Although a stolen EMV card number cannot be used to make a counterfeit EMV payment card that works in an EMV terminal, it can be used in an online CNP transaction. Fortunately, e‑commerce merchants can protect themselves. All payment cards now come with a three-digit card security code (often called a card verification value, or CVV) printed on the back near the signature line. This number cannot be stolen electronically because it is not part of any account information included on a magnetic stripe or in an EMV chip. Requiring online customers to provide a CVV code with each online transaction ensures that they are in physical possession of the card. CVV codes do not prevent fraudulent use of a stolen card, but a stolen account number cannot be used in a CNP transaction without a matching CVV code.

The battle against payment card fraud never ends. Thieves become smarter, which means merchants, issuers, and payment processors must work smarter to protect themselves.

Merchants should embrace EMV card acceptance as a way to make card payments safer for themselves and their customers. Merchants should also see EMV card acceptance as part of a larger security strategy that needs to include encryption and tokenization. Online merchants should prepare for a shift in fraud toward online CNP transactions, which means enforcing the requirement for customers to provide a CVV code during online payment. None of these measures puts an undue burden on customers, but they do give customers greater confidence that their account information will be safe when they make a purchase.

Financial service providers and issuers must embrace EMV technology as well, working with payment processors to ensure that they are issuing cards that work in as many retail environments as possible. Reducing the incidence of payment card fraud reduces losses while improving consumer confidence—a winning combination for everyone.

Check out the infographic to learn more about the essential role EMV plays in the reduction of payment card fraud.

Infographic: The ABC's of EMV

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