A recent report linked U.S. fraud and the EMV chip migration. The U.S. Payments Forum offers several clarifying points in response to media coverage on these topics:
This report gives statistics on compromised records but offers no data on actual occurrence of fraud.
EMV chip payments are effective at reducing fraud. Chip payments were introduced to curb in-store counterfeit card fraud, which was the largest source of fraud in the U.S. Counterfeit card fraud is down over 80 percent at merchants that have enabled chip, so it is indeed working.
Fallback to allowing a chip card to be swiped at an EMV-enabled merchant terminal, usually by fraudsters who have counterfeited the magnetic stripe data from a stolen card, is controlled by issuers declining such transactions and with better training by merchants. Payment networks are reporting low fallback rates in stores, consistent with EMV chip implementations in other regions.
It is true that there are some U.S. merchants that still haven’t implemented chip, but 99 percent of the top 200 retailers are chip-enabled and 98 percent of all payment volume in the U.S. is on chip cards. For those that have not yet enabled, we know that they and the rest of the merchants are diligently working towards that goal of being 100 percent enabled and will close any remaining holes for in-store counterfeit card fraud.
It is also true that EMV chip payments do not mitigate e-commerce fraud. Merchants and issuers know that they need to be vigilant on detecting stolen data used at online merchants and are utilizing many tools today such as tokenization, fraud detection tools and advanced authentication to do so. The Forum is working with merchants and other stakeholders on many projects addressing e-commerce fraud and best practices for mitigating these threats. All stakeholders in the payments ecosystems with questions about EMV and reducing fraud across all channels are encouraged to join us at our next meeting.