4 Things Retailers Need to Know About the EMV Impact in 2017
We’ve just passed the one-year anniversary of EMV adoption in the U.S., and it’s still a hot topic in the payments and retail industry. Microchip cards are here to stay, and retailers can’t afford to ignore their impact in the year to come.
1. One year ... it’s still just beginning: A recent study found that only 29 percent of merchants were able to actually accept chip cards. Far more have EMV terminals stalled waiting for official certification. This delay has caused anger and frustration for many merchants, and confusion for consumers forced to switch back and forth between “dipping” and “swiping.”
Moreover, shoppers and retailers alike have complained about the waiting time with EMV. Card networks are rolling out solutions, but those are unlikely to be implemented until after the busy holiday period. Few merchants want to risk making a change during this crucial season.
2017, then, will see more merchants able to use EMV terminals, consumers getting used to “dipping” their cards more often, and faster options becoming more common at checkout. Don’t think you’ve seen the bulk of the EMV impact by now — in reality, it’s just beginning.
2. Online fraud is spiking and will keep rising: The whole reason for moving to EMV in the first place was to cut down on card-present fraud by making cards harder to counterfeit. The good news is, it’s already working. Counterfeit fraud has declined by more than 50 percent compared to the same period a year earlier.
The bad news is that fraudsters haven’t stopped, they’ve just headed online. The Global Fraud Attack Index found that online fraud rose 26 percent in just the first two quarters following the EMV adoption deadline. As EMV adoption spreads, online fraud will continue rising as criminals move to the new path of least resistance.
Retailers need to take this into account in their online calculations. 2017 will be a year during which card-not-present fraud rises — probably significantly. Any merchant that hasn’t done so already needs to ensure that their fraud prevention can cope with the influx without adding friction for genuine customers.
3. Customer experience is threatened by EMV: The threat of increased friction is a serious concern for both in-store and online merchants. The added time in card-present transactions means some retailers have opted to stick with cash or “swiping” and take the fraud risk.
Meanwhile, some online retailers, aware of the spike in fraud, have made their fraud prevention draconian to weed out any fraudsters. This is good for stopping fraud, but bad for customer experience — which means, overall, it’s bad for business. By blocking loss from one direction (fraud) they’re inviting it in another (lost sales).
What retailers need in 2017 is fraud prevention that will work instantly and accurately, protecting the business and providing a frictionless shopping experience for legitimate customers.
4. Watch out for mobile: One of the unexpected consequences of EMV was an additional focus on mobile payments. Some physical stores started encouraging customers to pay via mobile as the faster option.
Online commerce, too, owes much of its recent growth to mobile — and criminals haven’t been caught napping. In fact, as Forrester noted, “mobile offers fraudsters more options than any other channel.” With more fraudsters moving to card not present, stopping mobile fraud is set to become a priority in 2017.
Adapting e-commerce norms to mobile isn’t enough; mobile is distinctively different, and is significant enough in terms of revenue potential to deserve a mobile-first approach. This includes fraud prevention, since the data available on mobile devices is different to that available via e-commerce, and behavioral patterns of good and bad consumers are different too.
EMV is Here to Stay
Heading into 2017, retailers should consider the impact that EMV may have on their business, and adapt accordingly. Stopping fraud shouldn’t increase friction. In fact, making fraud prevention real time and accurate rather than risk-averse should both block fraud and contribute to a frictionless checkout.
Liron Damri is the founder and COO at Forter, a provider of frictionless fraud protection services for online retailers.