JoAnn DeLuna, Payment Editor, BTN
Since the card networks announced their plans to transition
to the EMV standard in 2012, players including issuers, merchants, acquirers
and processors have been prepping for the migration that is expected to prevent
in-person fraud in the United States.
Banks began replacing existing U.S. cards with chip cards
long before the liability shift deadline last October, but the Payments
Security Task Force industry coalition estimates that we will be well into 2017
before the transition to chip cards is complete.
Merchants have been slower to implement new terminals. Last
year, Visa estimated that it could take five years before 90 percent of card
transactions in the United States are processed using both a chip card and chip-accepting
terminal.
As the migration plays out in 2016 and beyond, we can expect
some unintended consequences:
Online Fraud Spikes – Chip cards are great at
stopping in-person fraud, but they don’t do much to stop card-not-present
fraud, or online fraud. Based on EMV migration in other markets, experts
predict online fraud to spike as cyber criminals target the next weakest link.
High Demand for Virtual Cards – Travel and card
program managers have already latched onto them for increased security and other
reconciliation benefits. If online fraud spikes, single-use virtual cards are a
smart option. If hackers manage to get their hands on a restricted, tokenized
virtual card number, it becomes virtually worthless.
Rising
Tide for Mobile Pay – EMV terminal upgrades may well advance infrastructure
for mobile pay. As merchants upgrade to EMV terminals, why not go all the way
with an NFC-enabled model? Doing so will fast-track the infrastructure for
mobile pay. Last year some networks enabled mobile pay for corporate cards:
American Express corporate cards work with Apple Pay, while MasterCard enabled
corporate use for all digital wallets. The International Air Transport
Association will introduce its own digital wallet soon. Mobile payment hasn’t
gained much traction in the corporate space yet, but as the infrastructure
expands this year, watch what happens.