US merchants, are you ready for an increase in fraud? It will happen after October when Chip and PIN becomes mandatory in Canada.
Here are some facts.
According to Visa Canada APACS reported a 35% reduction in fraud losses to UK merchants. If these things are as secure as the Association’s hype wants us to believe, why is there only a 35% improvement? There’s more. Notice that the report says losses at UK retailers are down by 35% since 2005. They are talking about Card Present (CP) merchants. At the same time, there was a 43% increase in Card Not Present (CNP) transactions. And they are talking about UK merchants. Overseas CNP fraud on UK cards skyrocketed. “Overseas” from the UK perspective translates to a lot of US merchant victims. Another section of the referenced website claims that, “fraud related to lost and stolen payment cards has decreased by more than half since the adoption of Chip & PIN in 2004. I think that’s significant because lost or stolen cards more frequently result in CP transactions. CNP fraud normally results from the data hacks so the on-line merchant sees no added benefit from the lost or stolen card protection. I haven’t seen any recent articles in reference to the magnetic strip but, according to a 2008 article in SecureIDNews, the strip technology will be accepted until 2015. And the Visa Canada website does tell us that the readers will read both technologies.
Chip and PIN effect in the on-line fraud world.
In fairness to the Chip and PIN technology, it’s reasonably successful at doing what it was supposed to do; reduce CP fraud.
Unfortunately, it has pushed fraud to the CNP realm. In October, Canada goes totally Chip and PIN. A lot of their fraud will go to just about the only place it can. The US.
Stand by, US merchants. There’s more coming!
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- Chip and PIN is hackable too
- U.S. is slow to use safer credit cards
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