As everyone predicted, Chip and PIN continues to shift fraud to the Card Not Present world. If you’ve been following this blog for a while, you’ve seen me predict it more than once. I discussed it several years ago when Europe was migrating to the cards and I said it in August of 2010 when Canada announced that it was migrating to Chip and PIN.
An article in this morning’s Banking Times in the UK not only verifies the predictions but tells us that it’s even worse than we thought.
Chip and PIN was designed to reduce counterfeit credit cards and those counterfeit cards are used in Card Present (CP) fraud. The technology has worked well. Counterfeit card fraud has dropped 60% between March of 2009 and March of 2011. The problem is that the bad guys had to go somewhere so, as expected, they went to the Card Not Present (CNP) world.
As recently as three years ago, CNP fraud accounted for only 30% of Europe’s credit card fraud. Today, it tops out at 72%. That’s a tremendous increase.
As I said all along, I believe the real goal of Chip and PIN was to drive fraud to the CNP world where the merchant is not only liable for the losses but charged fees as well. There is no doubt that this has happened. Huge losses have been shifted from the payment industry to the merchant.
I can’t believe that the card issuers didn’t see this coming. As recently as a year ago, the card brands, Visa® in particular, were saying that Chip and PIN in the US was not in the foreseeable future. Suddenly there was a shift and Visa announced a mandatory role-out. Kind of makes you wonder but I leave it to you to decide on their motive.
On a personal note, I’ve been quiet for quite a while. Admittedly too long. Lots of things have been going on in my world and blogging has had to take a back seat. Hopefully, I’m getting back in the saddle.