How EMV Is Changing Payments and Fraud

EMV payment capability, which has yet to be employed by organizations in the U.S. but has grown in popularity in countries around the world, uses smartcard technology in order to better protect consumer transactions. EMV cards use an embedded microchip that works to encrypt each transaction for added security and are widely employed by banks, credit card companies, and other financial institutions. EMV payment technology has made fraud more difficult for in-person transactions. However, card-not-present (CNP) transactions don’t particularly benefit from EMV and some may argue that EMV will ultimately move more fraud to online channels. This is why card-not-present (CNP) transactions need a dynamic identity verification and fraud prevention solution now more than ever, as fraudsters shift strategies in order to continue to defraud organizations.


What Can We Expect to Happen to Card Fraud in the U.S.?

As EMV rolls out in the U.S., many are expecting to see a shift in fraud tactics. CNP fraud is estimated to grow significantly. According to the Smart Card Alliance, EMV adoption has shown a reduction in domestic card-present fraud, but a rise in CNP and cross-border counterfeit fraud. Since transactions are authenticated in physical locations using NFC technology and either a PIN number or signature, it is difficult for fraudsters to use stolen cards in a store. However, many cards can still be used for online transactions where tokenization isn’t as effective. Fraudsters will bypass chip-and-PIN verification methods online or in countries that do not have EMV card readers, making it critical for organizations to use more sophisticated identity verification methods.

Solutions for Organizations

Javelin estimates that CNP fraud in the country is expected to be nearly four times greater than POS fraud in 2018. Due to this, organizations need to implement dynamic fraud prevention solutions to ensure that customers truly are who they claim to be. Layered solutions will need to be implemented to prevent fraud while at the same time limiting friction during CNP transactions. IDology’s identity verification and fraud prevention platform offers real-time and on-demand authentication that enables organizations to gain further control of the experience and dynamically evaluate risk and escalate to higher levels of verification only when needed – thus minimizing legitimate customer friction.

The combination of offline smartcard security and online fraud deterrence gives businesses the tools needed to protect their customers. For more information about IDology’s solutions to prevent CNP fraud, contact a representative at (866) 520-1234 to schedule a demo.

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