In EMV’s Wake, Girding Against CNP Fraud

“Where there is opportunity, there is risk.”

So declared a recent e-book by CA Technologies, which delved into the 3-D secure landscape and the steps merchants must take to combat fraud in the wake of the EMV liability shift.

As the firm noted, eCommerce continues to grow at a heady pace, with more than 1 billion mobile customers in place. The firm noted that more than 1.4 billion smartphones are in use globally, which translates into an eCommerce market that is worth as much as $1.7 trillion at present. The wholesale embrace of eCommerce by consumers means that fraud – and specifically payments fraud through card not present (CNP) chicanery – has ample opportunity to grow, too. In fact, according to CA Technologies, the $2.9 billion in CNP fraud that was recorded in 2014 is likely to double by 2018.

Of course, the now official transition to EMV in the United States has some precedent elsewhere in the rise of CNP fraud. Within the United Kingdom, for example, CNP fraud skyrocketed in the wake of that country’s adoption of EMV in 2004, with a staggering 63 percent growth rate. Similarly, in Australia, post the 2004 EMV transition, CNP fraud grew at a 39 percent CAGR.

And so, with the examples of CNP fraud on the world stage just mentioned, CA Technologies said that a common theme emerges: There may in fact be a decline in stolen cards, or counterfeiting efforts. But cyberthieves are on the lookout for new avenues of fraud, which begs the question as to how players across the payment chain – from merchants to gateway companies to payment processors – can combat CNP fraud.

One key weapon in that battle: 3-D Secure, the XML based protocol that adds security for online transactions. CA said that the technology has evolved since its early days wherein the checkout process was marked by friction and one that led to marked instances of abandonment. And, as a result, merchants remained wary of adopting the technology, said CA Technologies, so much so that they would rather risk chargebacks than lose the sale due to consumer frustration.

But that was then, and there’s a new urgency for 3-D Secure adoption, and benefits to that adoption. As the e-book stated, the value to the merchant comes through data that can span online shopping information that can inform a better experience for users (and, by implication, more business for the merchant), ranging from device location to online shopping habits.

One way to spur increased adoption among consumers is what CA Technologies termed its “multi-layered approach” – which in this case uses a “zero-touch” authentication process that helps merchants identify cardholders in real time, using historical fraud data and other inputs to assign them a risk score, all without any impact to the consumer during the transaction process itself.

To learn more about this topic, download the e-book “Why 3D Secure Is Primed For Ignition” by clicking the button below.