Chargebacks are expected to rise across the US, Europe and the UK as the liability shift for EuroPay, Mastercard and Visa (EMV) card security comes into effect in the US today.
Businesses that don’t upgrade their point-of sale terminals to EMV compliant machines will now be held responsible for any fraudulent transactions that take place by swiping the magnetic strips of traditional cards.
While this is forecast to result in a considerable reduction of lost, stolen and counterfeit card fraud, opportunistic fraudsters are expected to follow the precedent set by other countries that have already implemented EMV, and start exploiting card-not-present (CNP) transactions due to the comparative lack of security surrounding them.
PaymentsSource reported that CNP transactions in the US “represent the bulk of card fraud; 45% according to Aite Group.” This is because most people still use card details to complete transactions online. It’s no surprise that the analyst group also expects online card fraud to more than double from $3.1 billion in 2015 to $6.4 billion by 2018.
A surge in CNP fraud could see chargeback rates soar, as fraudsters take advantage of the more vulnerable online retail channels. The chips embedded in
Considered a more lucrative target, online retailers are not safeguarded by the embedded chip of EMV transactions, and instead often only require card digits and CVV numbers for verification. Chargebacks filed as a result of this would significantly dent revenue and negatively affect a business’ bottom line.
With so much commerce now online this is not only a problem for newly on-board US retailers, but also reverberates as far and wide as the UK and Europe. Fraud managers will now have to work harder than ever before to keep customers secure online, and will need to make authentication and advanced security a top priority.
Identifying global trends and following best practice strategies is the most effective way for UK and European retailers to keep their losses to a minimum and prevent renewed threats.
However, his new surge of CNP fraud and resulting chargebacks is not insurmountable. Risks can be reduced with advanced fraud prevention technologies, and these will be key to fighting the rising threat of CNP fraud. Proper chargeback management can effectively recover lost revenue without increasing risks or costs.
