Credit Card Fraud Statistics
The bank Barclays has reported that 47 percent of all credit card fraud across the world affects cards issued in the United States, even though the U.S. comprises only 24 percent of card volume. So why is the U.S. the international darling of credit card fraud?
Some believe that the U.S. is the target of fraud because it is a rather affluent nation; however, so are many countries in Western Europe, but their levels are nowhere near our own. The real reason is that the United States has the weakest credit card data security of any western nation, as our technology has not been updated since it was created in the 1950s.
Credit Card Fraud Protection with EMV Chip
American credit cards are equipped with magnetic strips that store personal data on the store’s POS machine with every swipe. Hacking these machines has proven all too easy, as well. On the other hand, European nations, as well as those across South America, Asia, and Africa, have long since adopted EMV chip technology. The gap between the continents is astonishing – with 84 percent of European cards equipped with the EMV chip whereas only 7.3 percent of U.S. cards have the same security feature.
This EMV chip produces a unique transaction code every time it is used instead of revealing the cardholder’s confidential information. Hacking into a POS will only reveal the transaction key that cannot be reused, so efforts are rendered useless.
However, this feature is coming to the U.S. soon. By October 2015, all credit and debit card issuers must have a new EMV chip-enabled card in every users hand and all businesses that accept payments from physical credit cards (versus online transactions) must have a POS that is capable of reading EMV chips.
All of the ways that this will be enforced is not yet clear; however, we do know that as of October 2015, merchants that do not invest in an EMV-enabled POS system will be held liable for any credit card fraud and losses that result from their establishment being attacked. That’s right – your business could be on the line for the charges a hacker racks up on your customer’s credit card. Currently, many banks eat this cost, but that is soon to change.
Barclays found that countries that adopted EMV technology saw credit card fraud drop off sharply, with the UK experiencing a 70 percent reduction in counterfeit fraud. Even with federal pressure and the promise of relief from cyber terrorism, retailers are still falling behind in preparing for the transition. Some polls indicate that only 33 percent of American retailers will be ready for October 2015 deadline.