The retail fight against fraud continues

Retailers are on the front lines of the ceaseless battle against fraud at the point of sale. Businesses in virtually every industry face the risk of having their customer's credit and debit card data stolen or unknowingly making sales to thieves that use stolen card information to make purchases illegally. The discovery of either could send other customers away from the door, fearing for their own financial security, according to PaymentSource.

Larger retailers can deal with these concerns relatively efficiently due to their large stores of capital and available resources. However, small and medium-sized businesses could feel the effects of fraud much more severely because of their lesser  size.

According to Convenience Store News, 44 percent of retailers nationwide are thus far fully compliant with the EMV mandate, and three-quarters of that percentage are small and medium-sized companies.

While cases of fraud decrease as more merchants become EMV compliant, there is still work to be done in getting more businesses onboard with the shift in technology to further reduce criminal activity.

Fraud could be reduced with more EMV compliance

"Avoiding chargeback costs gives noncompliant retailers another reason to adapt to EMV chips."

At the Gilbarco Veeder-Root's 2017 Retail Technology Conference in May, guest speaker Steve Scarince, member of the U.S. Secret Service, said that since Canada has undergone a country-wide EMV implementation, the number of fraud cases in the United States has increased. He said the correlation adds to the credibility of EMV technology and that American retailers should follow the lead of their Canadian counterparts to improve security, according to Convenience Store News.

Gas stations and applicable convenience stores have until 2020 to accept EMV cards at their pumps before mandated liability shift occurs and retailers are faced the chargeback cost for losses to fraud. However, another Convenience Store News report stated businesses that experience high fraud-to-sales ratios, repeated chargebacks and chargebacks of notable worth could be forced to pay these costs before 2020.

Banks typically bear the brunt of fraud-based fees when retailers take chipped cards. The boost in security plus the avoidance of chargeback costs gives noncompliant retailers another reason to adapt to EMV chips.

PaymentSource noted  90 percent of U.S. merchants will be EMV compliant by 2020 and that losses from counterfeit fraud dropped 58 percent between April 2016 and April 2017. But Payment Source also stated that, according to a 2017 Debit Issuer Study, financial institutions lost around $900 million in 2016 from debit card fraud. Until fraud losses reach zero dollars, retailers will still need to increase their protection efforts.

To learn more about effective card processing software, get in touch with Cloud 9 today.

Leave a Reply

Scroll to Top