Two years following the EMV fraud liability shift in Oct. 2015, evidence points to the implementation of EMV technology by merchants and credit card companies as largely successful in preventing financial losses and protecting data during transactions.
However, the technology has not stopped all instances of lost revenue from criminal activity. While cases of fraud in transactions occurring with a card present have dropped, cases of card not present fraud have soared. A CNP transaction occurs when a customer uses a card to make a purchase but the card's physical presence is not required or verified by the merchant. This transaction is typical for ecommerce purchases. Since merchants cannot verify the identity of the purchaser, fraudsters can easily buy goods with a stolen card.
According to a Dec. 2016 Visa presentation, global ecommerce will double between 2015 and 2019 from $1.7 trillion to $3.5 trillion. The market is ripe for criminals to exploit and it's important that vendors are aware of the dangerous and strengthening menace that is CNP fraud.
CNP fraud can cause lost revenue in multiple ways
"Merchants fighting this criminal activity must also balance the potential losses in efficiency."
A 2016 by researcher Aite Group commissioned by RSA, predicted that U.S. CNP fraud will grow from $2.8 billion in 2014 to $7.2 billion in 2020.
The United States was one of the last countries to adopt EMV technology. Data collected from other countries after their EMV implementations predicted that after the U.S. made the transition, a large spike in CNP fraud in the following years was probable, according to credit union advisory company CUES.
Visa noted that in the year following full EMV integration in Canada and Australia, the two countries experienced increases in CNP fraud by 30 percent and 126 percent, respectively.
However, merchants fighting this criminal activity must also balance the potential losses in efficiency that come with combating it. Upgrading online security with things like device verification or one-time passwords will protect customers but also extend transaction length. Sensitive security measures could result in valid cards being mistakenly flagged as fraudulent, ultimately resulting in fewer purchases and lessened revenues.
Preventative measures need to be taken
There are efficient steps being taken to fight CNP fraud that do not come at the cost of efficiency. Visa noted that using card verification value 2, or CVV2, numbers for online transactions can help venders verify the validity of a card. Address verification is a tool that can be used to authenticate a buyer's billing address.
EMV is a solution proven to be effective in stopping fraud during in person during pos card processing, however there is still work to be done in getting CNP transactions up to comparable levels of safety.
To learn more about effective card processing software, get in touch with Cloud 9 today.