How Has Card-Not-Present Fraud Been Impacted Since the Implementation of EMV?

Counterfeit card fraud accounts for 37 per cent of credit card fraud.

To tackle this, an initiative from Euromoney, MasterCard and Visa, known as EMV, has been implemented in the United States.

In countries where similar initiatives have been introduced, there’s been a strong success rate in reducing counterfeit card fraud, and it is hoped it will have the same impact in the States. However, with card present transactions becoming tougher to exploit, there has been concerns that softer targets like ecommerce and card not present fraud in general would increase.

But did these predictions come to pass?

The Predictions

Long before the October 2015 liability shift, analysts predicted that card not present fraud would experience a significant increase; this is what happened in other countries when chip and pin was rolled out.

As the payments industry exhilarated its move towards EMV implementation, these warnings continued. Javelin Research were among those warning of an increase in card-not-present fraud once EMV had been introduced, and other research groups predicted the same upward trend.

In 2016, further research indicated that fraudsters would turn their attention to card not present fraud due to a combination of factors, including the introduction of chip and pin, the sheer volume of ecommerce sites and mobile apps, and the fact that consumers are far more willing to shop online.

And in the run up to Black Friday and Cyber Monday, there were predictions of a spike in card- not-present fraud, and it seems analysts and research firms were right to be concerned.

The Increase in Ecommerce Fraud

As Scott Waddell, CTO of Iovation states:

“…the bad guys have had plenty of time to adapt their tactics and are in full swing with their online assault.”

Iovation’s research shows a 35 per cent increase in ecommerce fraud from October 2015, when the EMV liability shift was introduced – and these figures are expected to spiral. By 2020, it is thought they’ll be a notable decrease in counterfeit fraud to $1 billion, but it is estimated card-not-present fraud will have reached $7.2 billion by then.

The Global Fraud Index also detected an increase in online fraud following the EMV liability shift, however, it isn’t entirely clear whether the increase can be attributed to the implementation of chip card technology.

These are far from the only reports of a shift towards card not present fraud, and merchants are urged to do what they can to protect themselves from fraudulent transactions.

Decrease in Card Present Fraud

Although it is early yet, EMV does seem to be achieving its aims of reducing counterfeit card fraud, according to Visa. In April, Stephanie Erickson of Visa told that retailers who had introduced chip and pin had seen a reduction in fraud, while some retailers who couldn’t accept EMV had experienced an increase.

Moreover, a year after the introduction of EMV, MasterCard says counterfeit fraud has fallen by 57 per cent among retailers who have introduced EMV, or are close to introducing it. However, the risks of fraud increased significantly for retailers that don’t have EMV

A further study also highlights the impact of EMV on counterfeit fraud. Research from the Auriemma Consulting Group shows counterfeit fraud is down by 18 per cent and is now at its lowest levels since 2013. ACG say the decrease is consistent with the introduction of EMV.

EMV Implementation – a Slow Process

Most U.S. consumers now have chip cards but one of the biggest problems has been the inability to use them because of the slow take up by retailers. However, many of the issues with implementation have been out of their control.

While some retailers were reluctant to make the changes for cost reasons or the disruption it might cause their business, delays in certification have also been a major issue and this has prevented retailers from using their newly installed EMV terminals.

Smaller businesses have been slower to adopt EMV and while most of the United States biggest merchants can now take chip cards, it is thought that 63 per cent of merchants still can’t accept chip cards, leaving these retailers vulnerable to increased chargebacks.

Other Problem Areas

While many are concentrating on the increase in online or card not present fraud in general, it is also worthwhile noting that bricks and mortar stores that aren’t yet equipped to take EMV transactions could find themselves at a higher risk of fraud.

And as counterfeit card fraud falls overall, other problem areas are opening up. For example, ACG have noted an increase in identify fraud and fraudulent applications. Further research shows that $112 billion has been lost through identify fraud over the last six years, and more consumers fell victim to this type of fraud in 2016. There has also been an increase in new account fraud, with figures rising by 113 per cent in 2016.

Moreover, data breaches, which expose consumers to identify fraud, have been a huge issue throughout the past year, affecting numerous high-profile companies, and analysts predict more such incidents, and then there is the increase in mobile payments.

At the moment, merchants say their losses to mobile fraud are minimal, but a small percentage of retailers have noticed a marked increase in fraudulent activity, and as payment wallets such as Google Pay and Apple Pay become more popular, they are likely to become larger targets.


Given the levels of counterfeit credit card fraud in the United States, it was necessary for the payment industry to introduce measures to reduce it. However, the introduction of EMV only addresses the problem of card present fraud.

With limited opportunities to commit card present fraud, it was inevitable that card not present fraud would increase, with the most obvious target being ecommerce. This follows the same trend as the UK and other countries that have adopted EMV.

All predictions so far indicate that card not present fraud is increasing, and online retailers need to be extra vigilant to reduce their risks.