Could the recent Target card fraud case have been avoided with EMV?
EMV (Europay, MasterCard and Visa) has long been a topic of discussion in the United States. Having been adopted across Europe since the ’90s, fraud rates have been cut massively due to the complexity of the chip on board a card. In the US, no such measure exists, with payments still being made using the comparatively insecure magnetic strips.
Of course, some will say that the magnetic strip is perfectly fine – largely due to not wanting to incur the costs of switching to a safer system. But in the wake of the Target credit card fraud case that swept America last month there’s not better time to start having the EMV conversation properly.
The Target case is believed to have involved 40 million credit and debit card accounts and stolen the information of 70 million customers. That’s an awful lot of information that can be sold on to others, all thanks to a virus infected into Target’s POS system that skims payment details. Because of this, banks have had to reissue cards and file client complaints, costing them inordinate amounts in the process.
So, it’s no surprise that JPMorgan Chase CEO Jamie Dimon - who’s head of the largest bank in the US – suggested that now was the time for payment systems in the US to work together.
“This cyber-security stuff we’ve now pointed out for a year is a big deal. All of us have a common interest in being protected, so this might be a chance for retailers and banks to, for once, work together.”
It’s an interesting point, seeing as of June 2012 the US has currently been on a path for EMV migration. However, the lack of speedy adoption means there’s doubt about merchants willingly wanting to develop support for EMV within their businesses. There are cards out in the US that currently support EMV, but it’s useless to have such an anti-fraud measure in place if stores across the nation don’t accept it as a form of payment. As you may well know, there’s also a liability shift date set in place for businesses to have made the jump to EMV by then – with the deadline set for 2015 at the earliest – that’s a little too far away to be of any use right now.
According to the Nilson Report, “the absence of EMV cards and terminals in the US contributes to fraud losses”, and that “adoption of EMV at the point of sale is the strongest defence against counterfeit cards.”
Now, thanks to the terrible loss of data and consumer confidence, merchants, banks and card issuers are having a serious conversation about making the switch to EMV – something that should have been done years ago. Obviously the allure of future security technologies is high, especially when factoring in the cost of making the switch, but for a leading nation, the US is embarrassingly far behind.
How do you feel about the adoption of EMV? Should the US have jumped over earlier?
Let us know by leaving a comment below.[Image: r1c3y - Flickr]