October 4, 2018
EMV cards, otherwise known as "chip" cards for the embedded information chips they contain, were touted as the next great advancement in credit card security. According to a new study from Visa, EMV cards have lived up to their promise.
Visa discovered that as of March 2018, counterfeit credit card fraud is down 46% for all U.S. merchants compared to September 2015 – but for merchants who have completed the upgrade to EMV chip readers, counterfeit credit card fraud is down 75%. That's a significant improvement over 2017's 50% decrease from 2015 fraud levels.
Decreasing fraud correlates with the greater acceptance of EMV cards. As of June 2018, 3.1 million merchant locations – approximately two-thirds of U.S. storefronts – accepted chip cards for payment. Fewer than 400,000 merchants accepted chip cards in September 2015.
Visa claims that 97% of total U.S. payment volume was made with EMV cards. Approximately 1.7 billion EMV card transactions were made in June 2018, encompassing $76.7 billion.
Why are EMV cards so effective against counterfeit credit card fraud? The technology makes counterfeiting these cards extremely difficult.
With the old magnetic stripe system, all of your necessary information is contained on the stripe. If your information is stolen, it's relatively simple for crooks to make identical copies of your card and use them for fraudulent transactions. EMV chips communicate with your card issuer via the card reader and generate unique verification codes for each transaction that can't be re-used. Any stolen information is worthless for future transactions.
What if someone steals your actual credit card instead of making copies? With chip-and-signature cards, thieves can still make fraudulent charges posing as you (if the merchant isn't diligent with identification). Like debit cards, chip-and-PIN cards require entering a PIN number to verify the purchase, thus providing an extra level of security when your card is stolen.
Most chip cards and readers are still designed for chip-and-signature, but chip-and-PIN is expected to grow as more merchants adopt chip-and-PIN readers.
Fraudsters may have a harder time counterfeiting cards, but they didn't just give up on credit card fraud. They've moved their focus to other targets, such as opening false accounts with stolen information and making fraudulent online purchases. According to Experian, online shopping fraud increased by 30% during the first half of 2017 while EMV card use became more entrenched.
By now, your credit card issuers have probably issued chip cards to replace your old ones – but if they haven't, you should request a chip card immediately. The increase in safety is tangible.
However, you need more than a chip card to fend off credit card fraud. Protect your personal information to prevent crooks from opening fraudulent accounts in your name. Use strong passwords and change them frequently. Shred any documents containing personal information before throwing them away.
Consider applying a credit freeze as further protection. As of September 21, you can apply and remove a credit freeze to your account for free, preventing any potential lenders from accessing your credit history.
Check your credit report regularly for any fraudulent charges or accounts – as well as any reporting mistakes that could be dragging down your credit score for no reason. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
Given that Americans have racked up almost $1.04 trillion in revolving debt, most of which is credit card debt, credit card fraud will continue to be a tempting target for criminals. EMV cards are just part of an overall strategy for reducing credit card fraud. The credit card companies have done their part. Now it's your turn.
If you would like to prevent identity theft, join MoneyTips and check out our free Identity Protector tool.
Photo ©iStockphoto.com/Juanmonino
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