Chip and PIN - Wide World of Crime
By Jeni Moore
Crime is a global phenomenon and the newest spike in credit card crime has an unusual origin, Europe. According to a recent Forbes article written by Tom Groenfeldt, due to the belated implementation of Chip and PIN here in the United States, there has been an increase of fraud coming from countries that have adopted Chip and PIN years ago. That belief is bolstered by Allen Friedman, director of payment systems at Ingenico when he was quoted in the same article by saying, “Sixty-seven percent of UK-issued card fraud is from the US.”
The general principle at work here is that crime, just like water, will always find the path of least resistance. As the United States is the last G20 country to adopt Chip and PIN we are and will be seeing increased crime on our shores when it comes to credit card fraud.
Not only that, but it seems that updating the US market to the more secure Chip and PIN is significantly behind schedule. According to Merchant Warehouse’s Jenn Reichenbacher, “Worldwide, EMV has already become the standard for credit cards with 1.5 billion enabled cards in circulation (45 percent of the total) and over 21 million EMV enabled POS terminals (76 percent of all payment terminals). However, in the U.S., it’s estimated that there are only 10 to 15 million EMV enabled credit cards in use, representing less than two percent of the total cards in market. And, of the 10 million POS devices in the U.S. just one million (10 percent) are already EMV-enabled. The U.S. lags behind just about every other region in the world, with minimal adoption of both cards and terminals, while other regions, like Canada, Latin America and the Caribbean have already achieved a majority adoption rate in credit cards (54.2 percent) with nearly 85 percent EMV- enabled POS terminals.”
A liability shift from the credit card companies to the retailers that take the cards is going into effect in October of 2015 and may hasten the conversion. Nothing moves people faster than to put their money at risk. But, there is a long way to go and more work to be done.
What does this mean for the retailer going forward? Between the increase in fraud coming from abroad and the liability shift, it would be a good idea to begin the process of updating and improving the ability to process Chip and PIN cards. This maybe a difficult task and an expense that they may not want to carry, but there are few alternatives to complying.