Quartz reported today that nearly half (47%) of global credit card fraud occurs in the U.S., despite the U.S. only accounting for about a quarter (24%) of the world’s credit cards, according to a report from Barclays (see above graphic).
“The increasing instances of credit-card fraud — and the subsequent hassles, like not being able to use our credit cards or having to replace them more often — are mostly due to the fact that the US still relies on old, faulty technology that the rest of the world moved on from years ago,” wrote Quartz’s Shelly Banjo.
The U.S. still relies on old faulty technology that the rest of the world moved on from years ago.Shelly Banjo, Quartz
The technological culprit in question here is the magnetic strip on the back of U.S. credit cards, which is easy to replicate if stolen. Hackers can remotely install malware onto checkout terminals at retail stores to capture credit-card numbers. “The data gets transmitted to cyber criminals, who then sell the information to the highest bidder,” Banjo writes.
And the big reason the U.S. contributes disproportionately to global credit card fraud is because it does not yet mandate EMV (Europay, MasterCard and Visa) “chip and pin” standards for credit cards used by U.S. consumers and accepted by U.S. retailers. Below is a graphic detailing EMV deployment and adoption around the world.
“(EMV) technology is not totally bulletproof (paywall) and other problems exist that lead to credit card fraud,” Banjo writes. “But it’s pretty telling that the adoption of EMV chip-and-pin technology in the UK, which began all the way back in 2003, has led to a 70% reduction in counterfeit fraud in the UK over the past decade, according to Barclays.”
In October 2015, a ‘liability shift’ will take place, requiring U.S. merchants to accept chip-and-pin (EMV) cards.
Nobody is more familiar with the vulnerabilities of non-EMV credit card technology than perhaps Target or Home Depot, which experienced highly-publicized credit card data breaches in recent past.
There’s hope yet, however, as the U.S. is adopting EMV standards with an October 2015 “liability shift,” which requires merchants to accept chip-and-pin cards, as the fraud liability will shift from the card issuer to the merchant at that time.
iQmetrix is also readying its software and U.S. clients for the October 2015 EMV liability shift. Check out this article or contact your Account Manager for more information.