Full EMV Chip Card Issuance Two Years Away

Starting today, the EMV liability shift has finally kicked in and it appears that financial institutions across the U.S. are moving at a break-neck speed to distribute EMV chip cards to consumers.

In a report by Payments Security Task Force (PST), eight financial institutions said 30 percent of their credit and debit card volume contained chip-enabled cards and that is expected to grow by a solid 60 percent this year and to reach 98 percent card volume by the end of 2017, according to a press release.

“The latest forecast demonstrates the tremendous progress made to make chip cards a reality in the U.S. Consumers are the winners, as issuers and merchants are both working to deliver greater protections when paying for a purchase,” said Chris McWilton, president, North American Markets, MasterCard.

According to Reuters, the EMV chip migration has reportedly cost the U.S. merchants about $8.65 billion to upgrade their point-of-sale terminals to accept EMV chip cards. However, it appears that the U.S. market still has a long road ahead before it sees a full upgrade across the country.

By the end of 2015, only 40 percent of POS terminals are expected to be capable of accepting chip cards, PST reported.

Post EMV migration, while fraud at point of sale terminals is expected to drop, a surge is card-not-present (CNP) fraud is expected to hit the market. It might actually double to as much as $6.6 billion between 2015 and 2018, according to a research by consulting firm Aite Group.

The Federal Reserve Bank of Atlanta predicts that surge in CNP fraud would mostly come through fraudulent bank account applications and checks.

“Financial institutions should already be evaluating their check acceptance processes and account activity parameters to spot problem accounts early. Likewise, financial institutions should make sure their KYC, or know-your-customer, processes and tools are adequate to handle the additional threat that the credit and account application channel may experience,” said David Lott, a payments risk expert in the Atlanta Fed’s Retail Payments Risk Forum.

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