Despite the warnings, many financial institution leaders were hopeful EMV chip cards would be the magic bullet for what has become a rampant card fraud problem in the United States. Although the country is far from mass adoption of the updated chip-based payment authentication standard, we are close enough for the hopefuls to experience a little disappointment.
Why, after all the complexities, the configurations and the investments in chip technology, is the United States still dealing with payment card fraud? While the answers are not exactly simple, they can be categorized in three buckets:
1. Counterfeit cards swiped at non-compliant merchants.
Fraudsters always take the path of least resistance. Counterfeit cards are one of the easiest and most lucrative schemes available to bad guys – whether they are lone wolves or belong to an international crime ring. Why reinvent the wheel when so many merchants continue to insist their customers swipe instead of insert? Visa recently reported less than half of the company’s in-store payment volume comes from chip-enabled merchants.
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