We knew it was coming. The industry at large was forewarned that as the EMV migration in the U.S. progressed, fraudulent transactions would find the weakest link and focus on CNP or remote environments. There was still some hope that the U.S. experience would not be as dramatic as what was experienced in Western Europe, for example, as fraud tools and mitigation strategies have continued to improve over time. A recent study from Lexis Nexis is unfortunately not bearing that theory out:
2015 is an especially demoralizing year for merchants as fraud consumes even more revenue. All merchant segments are losing more revenue to fraud this year and, in the face of these losses, more merchants believe that the additional costs of mitigation are prohibitive.
The upward trend of fraud losses as a portion of revenue for all merchants continues in 2015 at 1.32%, up from 0.68% in 2014. While all merchant segments took a substantial hit on fraud losses as a percentage of revenue, international and mCommerce merchants were hardest hit with 1.56% and 1.68% loss, respectively.
The fraudsters are also aware that EMV debit is rolling out more slowly than credit and therefore debit cards have seen a disproportional jump in fraud:
Debit card fraud surged in 2015, as debit card-accepting merchants attributed 30% of fraud to this payment type. This trend was expected as the advent of EMV will make the misuse of counterfeit payment cards nearly impossible. Fraudsters have been expected to make a last-ditch effort to collect and use as much breached and skimmed card data as possible.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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