May 24, 2016
Though only about 20 percent of merchants now are able to accept the EMV chip, fraudsters are turning to CNP fraud in huge numbers, according to panelists at a Tuesday morning session at the CNP Expo in Orlando, Fla.
“I’m hearing about steadily rising CNP fraud,” Julie Conroy, research director of Boston-based consultancy Aite Group, said as she moderated a session on some of the unintended consequences CNP merchants and service providers are experiencing as a result of the migration to EMV in the U.S. Most experts fear chip cards won’t reduce fraud, but will just force criminals to look for other opportunities — that means businesses that rely on CNP sales.
“Fraudsters don’t go away when you push them,” said Jacob Bennett, vice president of risk and underwriting at National Merchants Association. “They go somewhere else.”
Merchants at the educational session were worried they will lose money if they don’t install expensive and complicated systems for handling the chip cards, which are in use widely outside the U.S. Many card-present merchants already are suffering losses because they don’t have the new machines and are also losing money because they are rejecting some sales for fear of fraud, which the merchants are now responsible for and there has been a significant increase in chargebacks.
Some kinds of merchants have suffered a significant increase in declines as millions of cards that might be used for automatic payments are reissued.
“For merchants who do a lot of long-term or recurring accounts, we see a greater impact,” Jamon Whitehead, senior manager of risk and payments at Backcountry.com, said.
And some merchants, such as airlines and money transfer services, are more susceptible to the fraud, Houlihan said. Account takeovers will be more common, he added.
“Every online shopper has a much larger footprint than they used to,” Houlihan said. “It’s easier to use the data. (Criminals) are going to adapt to the environment.”