In the year 2012, US ecommerce sales were $186.2 billion, which is an increase of 15% from 2011. This was the strongest annual growth recorded before the recession. The point is that despite the emergence of online shopping as an important buying channel. However, the marketplace is still very immature when it comes to safety standards as an attempt to increase the safety standards have only led to an increase in the number of fraudsters, with ecommerce as the prime target presently.
Having said that, today, the world of ecommerce has been made more accessible through the use of credit cards. With credit cards, it has become easier and more convenient to shop online. The credit card industry has evolved to a great extent to prevent fraudulent transactions.
Credit card organizations have developed a global standard called EMV (which is short for Europay, Mastercard, and Visa – what are the three organizations that have developed the initial specifications for the credit card system). This system has come into force from October 1, 2015, which was marked as the deadline for US merchants to support EMV for card-present transactions. Else, they risk being liable for any fraudulent transactions.
EMV is the global standard for processing credit and debit card payments. This system makes use of credit cards that contain microchips rather than magnetic stripes. A consortium called EMVCo manages the open-standard specifications for the system. Accordingly, the purpose of EMV payments is to ensure worldwide interoperability as well as acceptance of secure payment standards. It needs to be understood that a very common form of online shopping fraud that happens is card-not-present attacks. It is thought that in the present ecommerce scenario, these will reach new levels.
With the emergence of new merchant sites every day, these websites are susceptible to rising levels of fraud. Therefore, an EMV rollout can potentially solve the problem, which can open doors for an easy as well as efficient way to scale up security for card issuers. The EMV has the potential to provide banks, merchants, and consumers with a more cost-friendly solution than other schemes which grab a significant percentage of the transaction.
The main function of EMV is to reduce credit card fraud that result from counterfeit, lost as well as stolen cards. These smart credit cards are capable of combating fraud by leveraging a microchip that is called an integrated circuit card (ICC) that holds sensitive account data unlike the conventional magnetic stripe. This makes the EMV more secure to use than a conventional credit card. Thus, every time an EMV card is used for payment, the chip creates a dynamic transaction code that cannot be replicated. Hence, stolen card information from a POS machine is just not reusable.
Earlier, if a merchant processed a fraudulent card, the card issuer absorbed the cost. However, the current situation is that if someone purchases at your store with a fraudulent card and you haven’t upgraded to an EMV reader, it is the merchant i.e. you that owns the liability and not the card issuer.
While this works for in-store purchases, EMV transactions aren’t really applicable to online transactions. Since it would become harder to make fraudulent transactions in-store, fraudsters are going to simply make it big online. In countries where the EMV has been implemented, there has been a remarkable decrease in card-present fraud, but the instances of card-not-preset fraud have gone up by up to 100% in the UK and even up to 360% in France.
Countries such as Australia and Canada experienced comparable spikes in online fraud as well. Hence. online stores need to become more proactive when it comes to online security and consult a full service ecommerce agency to succeed in their businesses.
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Shivi Rao is a content marketer with Krish. She has worked in various industries spanning technology, science, rural marketing, startups & unicorns, eCommerce business, and digital marketing, believing that content is the foundation to facilitate the visibility of any organization and ensuring her words do the same. In her free time, you can either find her lifting weights in the gym or feeding the strays.
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