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As Credit Unions Adopt EMV, They Start To See Quick Gains in Fraud Reduction
January 4, 2017

By John Stewart

Credit unions are making fast progress in their rollout of EMV chip cards, according to an update from PSCU, a major payments processor for this segment of the financial-services industry. Some 85% of PSCU’s clients have introduced, or are introducing, EMV credit cards, while the corresponding number for EMV debit card issuance is 60%, the St. Petersburg, Fla.-based organization said Tuesday.

Known formally as a credit union service organization, the 40-year-old PSCU claims more than 850 member credit unions that together represent more than 20 million credit, debit, prepaid, mobile, and online bill-payment accounts.

Since Oct. 1, 2015, when the industrywide shift to EMV began in earnest, card fraud for its members has dropped 20% compared to the previous 15-month period, PSCU said. The organization did not specify what types of fraud have declined, but it is likely most of the improvement has occurred in counterfeit fraud. PSCU also said it credits the improvement entirely to the movement to EMV.

“PSCU proactively developed a unique implementation approach to EMV that was designed to fit the needs of our member-owner credit unions, as well as ensure that our credit unions lead their markets in terms of EMV technology deployment,” said Vladimir Jovanovic, director of debit and prepaid product management at PSCU, in a statement. PSCU was one of the earliest proponents of chip cards, starting deployments in 2011.

Merchant adoption, however, “continues to lag,” PSCU said, resulting in more than $7 million in chargebacks to unprepared retailers so far. Before the national rollout of EMV, issuers would have borne these chargebacks. But a liability shift instituted by the card networks for EMV moves responsibility for counterfeit fraud losses to the party that is unable to process chip cards. Last year, Visa Inc. and Mastercard Inc. introduced some relief for merchants in response to widespread concern about EMV-related chargebacks.

At the same time, PSCU has seen a migration of fraud to other channels in response to the implementation of EMV. “Card-not-present fraud rates have also started to increase slightly as fraudsters seek alternate avenues not impacted by EMV. PSCU has already identified tools and resources to help address the potential for increased fraud within that environment,” the organization said.

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