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The United States now leads the world in a new category, though I don't foresee chants of "USA USA" or "We're No. 1! We're No. 1!" because of it.
In 2013, a study by Javelin Strategy & Research found that the cost of payment card fraud rose to $11 billion from $8 billion in 2012, the highest in the world. According to a report in Independent Banker, U.S. payment card fraud accounts for nearly half of all such fraud worldwide, though only 27 percent of all credit card transactions take place here.
Other countries are ahead of the United States in the adoption of EMV cards, which can drastically reduce the costs of payment card fraud. Since the United Kingdom adopted the EMV standard in 2004, such fraud has fallen by more than 60 percent.
In the United States-the only major industrial country that has yet to adopt EMV- payment card fraud costs are expected to continue to increase until October 2015, when EMV payment card standards are fully embraced.
The EMV standard-named for its creators, Europay, MasterCard and Visa- includes a computer chip embedded in every credit or debit card. Each time an EMV card is used, it creates a code unique to that transaction. With the current magnetic stripe card now used by most Americans, the information stored on that stripe never changes. A thief who manages to copy that information can use it until the card is canceled. A thief who steals information from an EMV card transaction has broken the law for no purpose. The information cannot be used for another transaction.
The change to EMV cards brings with it a shift in liability for payment card fraud. Right now, the card issuer is generally liable for any fraudulent transaction. After Oct. 1, 2015, that will no longer be the case. Any retailer who fails to change its systems to accept EMV cards will bear the costs of any fraudulent use of an EMV card.
Small business owners have plenty of time to prepare for the change. Chase has prepared a FAQ outlining what retailers need to know about the switch and your financial institution should be able to assist you in getting started.
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