You are aware that the credit card industry ostensibly moved to chip cards–often called EMV cards–last fall. A major consequence of this move was that merchants who did not accept chip cards had the liability for chargebacks for fraud shifted from the card-issuing bank to the merchant. And the tab for that shift is now coming due. According to some published reports, merchant chargeback rates increased 15% in the fourth quarter of 2015 over the same quarter of 2014. That rate is expected to accelerate in 2016.
Moreover, a recent report says that only 22% of merchants are currently able to process chip-card technology. That means that there is fertile ground for fraudsters out there. And they seem to be taking advantage of it. According to Visa, merchants using chip card readers saw fraudulent transactions fall by 18%. Those not using chip card readers saw fraudulent transactions, in contrast, rise by over 11%.
A significant hindrance to more widespread chip card implementation are delays in both having the equipment installed and turned on and in processing each transaction. The delays in installation seem to stem from just how many terminals need to be updated and making sure the software is fully compatible with POS systems. On the transaction front, Visa is moving to speed up transaction processing by shortening the amount of time chip cards need to be attached to the terminal. Which just seems smart when we've been sliding the magnetic strip in mere seconds for decades. In fact, I traveled in Italy last month. Chip card transactions there went smoothly and quickly. We should at least be able to match European speeds here in the USA.
The bottom line: chip cards are here to stay, they cut fraud, and merchants who don't accept them are on the hook for a rising number of fraudulent transactions. If you or your system hasn't yet made the move to chips, now is the time.
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