U.S. CFOs and senior finance executives have added their voice to the growing chorus attributing a rise in CNP fraud and chargebacks to retailers’ implementation of EMV-compliant POS systems and chip cards. Sixty-four percent of corporate finance leaders have seen an increase in both the number and the dollar value of credit card chargebacks related to CNP transactions since the EMV liability shift a little more than a year and a half ago, according to a new report from CFO Research and Vesta Corporation. More importantly, from the perspective of the organizations, the attention needed to deal with the increase in risk has diverted resources from important corporate initiatives.
Increased CNP fraud risk, which many (though not all) have attributed to the EMV migration, has inhibited product development at some organizations. For some companies it has been worse: Nearly half (43 percent) of finance executives confirmed that attention to fraud has interfered with corporate efforts to develop new products or has even resulted in a change in business model altogether. An equivalent number said fraud risk has interfered with their budgeting process or revenue projections. More than half of those polled expect their fraud prevention strategies to change as a result.
“As merchants have upgraded in-store payment security measures, fraudsters have flocked to CNP channels—online, mobile and elsewhere—with stolen payment credentials and seriously harmed merchants’ growth potential,” said Vesta Chief Marketing Officer Tom Byrnes. “Unfortunately, fraud risks are distracting merchants from focusing on what they do best: innovating and satisfying customers to boost revenue and grow their businesses.”