Issue link: https://read.dmtmag.com/i/107993
After introduction of the new cards and readers, overall credit card fraud in the United Kingdom was reduced by 32.5 percent from 2004 to 2011, with fraud from lost or stolen cards decreasing 56.3 percent. Counterfeit magnetic stripe cards dropped 72.5 percent during the same period. Similar fraud reduction is expected here once the new cards become common. "The pockets of fraud that remain correlate most directly to businesses that didn't upgrade their point of sale equipment to support EMV," noted Forbes. To promote the use of EMV cards and readers, the card associations have created incentives and benefits tying adoption of EMV with Payment Card Industry (PCI) compliance and additional financial protections from fraud. EMV adopters will generally see the greatest benefit starting in 2015, Forbes pointed out. Starting then, PCI compliant merchants who process at least 75 percent of their network's card volume on EMV-capable equipment will get reduced annual PCI reporting requirements from Visa and American Express and PCI audit and ADC relief from MasterCard. Because pump upgrades are so costly, the card associations have pushed deadlines for shifting fraud liability to automated fuel dispenser non-adopters out to 2017 for pumps only. Other merchants accepting bad cards will be liable for those charges. "To promote the use of EMV cards and readers, the card associations have created incentives and benefits tying adoption of EMV with Payment Card Industry (PCI) compliance and additional financial protections from fraud." When does this happen? In Fall 2012 few EMV cards were in consumers' hands and few U.S. merchants had begun accepting them. Expect to see the new cards starting in early 2013. The overall migration plan will take several years. "Because this change requires substantial changes by so many contributors, from the card associations to the card issuers to the payment processors to the business owners who have to upgrade equipment to adoption/acceptance by consumers, a lot of moving parts have to come together in a relatively short period of time," said Forbes. "The card associations realize a paradigm shift of this magnitude doesn't happen overnight, but the clear benefits, including the anticipated reduction in fraud, mean all of the key players want to progress this as quickly as possible." Once new hybrid readers are installed and activated, if customers try to use the magnetic stripe, they will be prompted to use the chip instead. Clerks and customers will discover that EMV cards must remain inside the card reader until the sale is completed, increasing the risk customers will leave them behind. As EMV has become widely accepted in Europe, magnetic stripe only cards continue to work, but few card issuers offer them. "EMV-ready card readers will look for a chip and automatically process the purchase as a chip transaction," Forbes explained. "If there's not a chip present, or the chip is damaged, it will use the card's mag-stripe." For current information, visit the Visa, MasterCard, Discover, and American Express websites or contact your payment processor for the necessary technical specifications. WINTER 2013 OIL PROPHETS 33