Recent analysis of FTC data by ValuePenguin, a NYC-based finance site, found that credit card fraud complaints rose sharply in 2015. After a few years or relative lows, the figures are back to their pre-recession levels. The growth in complaints coincided with the period leading up to the EMV-deadline in the United States. With this news, it’s a good idea for businesses, now more than ever, to examine their payment processing security and procedures.
The new EMV chip technology makes cards significantly harder to counterfeit, which should put a damper on card-present fraud. Business Insider Intelligence reports that 80% of Mastercards in the United States now have chips on them. Merchants appear to be upgrading their payment terminals as well. There are now 1.7 million EMV-enabled Mastercard merchants in the country, up from 1.4 million at the end of April and 1.2 million in March. These are huge improvements over what we saw last year. In 2015, 1.98% of card-present transactions were EMV-compliant. CardFlight estimates now put that number at 46%.
Experts interviewed in the ValuePenguin study agreed that card fraud is likely to migrate to the web in the coming years. This is the trend that has been observed globally whenever a country implemented EMV-standards.
This factor can create a significant problem for some online businesses accepting direct card payments. Chargeback compliance for networks like VISA and Mastercard can be draining on a company’s resources. Online merchants whose chargebacks grow to over 1% of their total transaction volume run the risk of losing their right to take card payments. This can be ruinous for small online merchants who don’t want to rely on PayPal transactions.
The spikes in credit card fraud complaints can largely be attributed to the growing number of data braches over the recent years. According to data by the Identity Theft Resource Center (ITRC), the frequency of data breaches that exposed credit card/debit card numbers peaked in 2009 and dropped to a low in 2012. Since that time it has more than doubled.
If you’re running a business that processes card information, data breaches are something that should be on the top of your mind. Beyond the immediate costs in fines, chargebacks, and compliance, it can be a severe blow to your image and brand. There are a few proactive steps business owners can take to mitigate breaches.