April 29, 2016
Consumers and brick-and-mortar stores across the country have been juggling the challenges of adapting to EMV technology - the microchip cards that will make card present fraud more difficult. Despite a number of setbacks, the potential benefits are worth the bother.
When it comes to card-not-present (CNP) transactions, however, it’s a different story. With e-commerce, mobile commerce and phone orders it can seem as though EMV is all downside and no upside.
The Predicted EMV “ Fraud Tsunami” Has Arrived
According to Forter (http://www.forter.com/resources/)
EMV doesn’t help in CNP transactions, because the chip can’t help when the card isn’t physically present. But it does hurt: as in countries which have already adopted EMV, U.S. adoption is leading to an increase in CNP fraud. If stealing in person is harder, criminals don’t give up - they just move to a more vulnerable channel.
In fact, the Global Fraud Attack Index™ found that the CNP fraud attack rate rose steadily throughout 2015, for a total increase of 215% over the twelve month period. And in the critical holiday period, when the fraud rate usually dips (since there are so many more legitimate shoppers), in 2015 it actually rose by 11%.
What It Means For Retailers
The most obvious consequence for online retailers, of course, is that they face an increased rate of fraud attacks. That means their fraud prevention has to be up to the challenge.
Scale is a particular concern, since many antifraud systems still rely on manual reviews of transactions - something which has caused customer frustration and order delays for years, but which will become prohibitive as CNP fraud attacks rise. To combat this issue, retailers need to move to full automation.
The other side of the coin is equally concerning, however. Many retailers are tempted to batten down the hatches, to protect the business in the face of the rise in attacks. While this is understandable, the impact on customer experience would be considerable and, in an age of high consumer expectations and huge customer choice, problematic. Merchants must resist this urge and, instead, focus on making sure their fraud prevention is frictionless and contributes to good customer experience.
Good Customers Shouldn’t Suffer Because of Bad Ones
Slowing down order confirmation and fulfillment through manual review, demanding extra information during checkout and rejecting customers who have complex buying stories or who have typed in their CVV number incorrectly is not good for the business.
Merchants must concentrate on developing an approach to fraud prevention which both blocks fraudsters and smooths the path for genuine buyers - wherever they are in the world, on whatever kind of device, and however they want to pay.
Fortunately, new technology makes this possible. Full automation can banish the frustrations caused by manual reviews, and real-time antifraud can ensure that fraud prevention becomes friction-free, contributing to a smooth checkout.
Find the Silver Lining and Make the Most of EMV
Retailers who take a fresh look at their fraud prevention with this in mind will actually turn EMV adoption into an opportunity - making it a catalyst for improving the customer experience on their website both at checkout and afterwards. EMV can in this way lead to more good sales, and to happier customers.
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