Chip and PIN - Still Failing?
Back in May of last year, Iblogged that Chip and PIN in the UK was looking like another failure. My overall prediction was that the technology might be successful in the UK until some bad guys broke the technology, but would push fraud over to the Card Not Present realm. Of course I wasn’t the only one making that prediction. Nevertheless, that’s what’s happened.
In the past couple of weeks, there’s been a lot of press on the statistics of the first half of 2007 that were released recently by APACS. Looking at those statistics, Chip and PIN has been both a reasonable success and a dismal failure. Lets look at the facts.
According to APACS own numbers as related in a recent article in the London Times on-line, ATM losses are down 51% and fraud in Card Present retail in the UK is down 4%. That’s not a bad number considering that the best the US has been able to do is tread water. But — mail and telephone order fraud in the UK has increased 44% in the first half of 2007. In US dollars, it’s up to $279.7 million against $194 million in the same period of 2006.
Here’s the real kicker; Card Not Present fraud committed on UK cards overseas (from their perspective) has increased a whopping 126% A lot of that is here in the US. And guess what - the US has no plans to migrate to Chip and PIN!
Has Chip and PIN been ’successful?’ It depends on your perspective and your definition of the term. If you’re a UK cardholder, you have a warm fuzzy but that’s about it. You weren’t liable for fraud against your card anyhow. If you’re a UK Brick and Mortar merchant, your fraud losses are down 4% but, ho-hum, you weren’t liable for the losses anyhow. If you’re a UK MOTO merchant, your fraud losses have increased 44%. If you are elsewhere in the world and accept UK issued cards, your losses are up 126% and that hurts!
But hold the phone! Remember who’s liable for fraud losses. Card Present and ATM losses are down 4% and 51% respectively. That’s significant and those were the losses that the issuers had to cover. Those losses are now being eaten by the Internet and MOTO merchants of the world. From the Credit Card company perspective Chip and PIN has been a tremendous success. They’ve pushed the losses over to the merchants!
Anyone want to speculate if this wasn’t the intention all along?
