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Card Fraud Costs the US Billions Each Year — Here's What Card Networks Are Doing About It

Payment card fraud cost the US $7.9 billion last year alone, an increase of almost 60% from five years earlier. In response, major US card networks have implemented a set of security standards called EMV — which includes cards that store user information on a chip rather than a magnetic stripe — to make card-present payments more secure.

EMV stands for “Europay, MasterCard and Visa,” which set out to create world-wide standardized protocols for “integrated circuit” cards and the hardware necessary to accept these cards.

The migration, which was announced in 2011-12, went into effect in October 2015, and likely won't be completed until the end of 2017, will affect various stakeholders. While issuing banks and merchants have to deal with the financial and logistical challenges of upgrading their payment cards to chip cards and terminals to readers that accept them, users must adapt to a new system of paying entirely. And until the EMV migration is complete, the once-seamless payment process will be disjointed: Users won't have a consistent card type or be able to pay the same way from store-to-store.

In a March 2016 report from Business Insider Intelligence, the journal takes a look at the US migration to EMV standards and determines whether its worthwhile for merchants to upgrade. It also assesses the inconsistencies and inconveniences that EMV migration could cause the average consumer and retailer, and its potential to shift consumers toward new forms of payment technology, like mobile wallets.

Here are some key takeaways from the report:

  • The US formally migrated to EMV card security standards on October 1, 2015, but the full migration won’t be completed until 2017. That’s because the migration affects multiple stakeholders. Banks, for instance, must upgrade users to more expensive chip-based cards, while merchants have to adapt their point-of-sale (POS) terminals to EMV-compliant ones.

  • Fraud will move to the weakest channel. In 2014, the US generated almost half of the world’s total card fraud despite only comprising one-quarter of transactions. That's because the US had the least secure payment card ecosystem. Once EMV is fully adopted in the US, fraud will move yet again, this time to online and mobile channels. In 2014, only 42% of fraud came from digital channels. In 2015, that number grew to 55%, and it's continuing to expand.

  • The disjointed payment experience that EMV provides could inadvertently increase mobile payment use. Mobile wallets, like Apple Pay, Android Pay, and Samsung Pay, have suffered from a lag in adoption. However, longer transaction times and a confusing payment experience with EMV could push users to equally secure but more convenient mobile platforms.

What does this mean for a US merchant? Is a merchant wishes to continue to process cards with the magnetic stripe and ignore the EMV protocol, they may currently do so. Merchants will still be able to conduct transactions since smart cards still have a magnetic stripe as a back up. And there are no fines for resisting migration to EMV.

However, there is a significant potential impact for not adopting this new technology: since October 2015, merchants and their processing companies are liable for any counterfeit smart card transactions. This is what is called a “liability shift.” Since being equipped with an EMV terminal could have theoretically prevented the fraud, the liability is now falls on acquirers and merchants.

Fortunately, Attila Business Solutions is experienced in this matter and can ease the transition to EMV for you -- affordably. For more information, give us a call at

1 (833) 398-0062 or e-mail

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