EMV Regulations Changing Payment Processing Environment

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EMV regulations are bringing big changes to the payment processing environment, but is your business truly prepared?

Credit card fraud ended up costing the US nearly $8 billion, which is about 60 percent higher than it was in 2010. This rising trend inspired the newly enforced EMV security standards, which were created by the leading credit card networks. The EMV migration was originally announced in 2012 with the enforcement deadline set for October 2015, but the full migration will likely not be complete until 2017-2018 because of the intensive overhaul that involves consumers, banks, credit card networks, and merchants.

Issuing banks and credit card networks, including those that created the EMV standard, are falling behind in distributing new EMV chip-enabled cards to users, and merchants have also lagged in implementing the new card reader system. Not all card users have an EMV chip card and some that do still are resisting using them because they do not yet know how to use these new cards. This is leaving the person exposed to fraud, but not quite like the businesses that do not comply with these new EMV regulations.

Although different sectors have different compliance deadlines, the first deadline on October 1, 2015, was for businesses. Merchants that are not compliant with EMV regulations are now responsible for all cost associated with credit card fraud that results from their business, as opposed to the banks that were previously on the hook for fraud cost. The only way to avoid being left with the bill is to implement EMV technology into your payment processing system.

Despite the new safety measures, credit card fraud and cyber attacks are still expected to increase in one area – online channels. Last year, the United States experienced half of the world’s credit card fraud, although we comprise only 25 percent of the world’s transactions because before EMV implementation the US had one of the least secure credit card systems. Similarly, as in-person purchases become more secure with EMV cards, hackers will switch their attention to the arguably less secure online merchants. Last year, 42 percent of fraud took place among digital channels, which rose to 55 percent in 2015.

This will likely cause mobile payments to increase. Mobile payments are nearly as secure as EMV payments and many users report feeling that mobile payments are more convenient than EMV payments. Mobile wallet apps like Apple Pay, Android Pay, and Samsung Pay are all expected to be used more and more by consumers.

The EMV migration and recent EMV regulations deadline makes this a good time to review your payment processing system and its security and invest in EMV and mobile payment technology and compatible hardware.

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