Great news for the credit card processing industry: Just one year into the shift towards the Europay, MasterCard and Visa (EMV) system in the United States, and counterfeit fraud costs have been slashed by just over 50%.
According to a report issued by credit card giant MasterCard in mid-September, counterfeit fraud costs are being sharply reduced thanks to more American merchants adopting the EMV system for accepting chip cards.
The report covers the period from April 2015 to April 2016, and it looks at the two million American businesses that have successfully installed the new terminals. The situation for merchants who have not yet switched to the chip card system is not looking good, as their counterfeit fraud costs climbed an astonishing 77%.
MasterCard described the reduction in fraudulent transactions thanks to chip card terminals as being very positive for shoppers, merchants, and banks.
This positive trend can be attributed to a sharp drop in counterfeit credit and debit cards. When American shoppers complete transactions with their new chip cards, unique codes are being created for every purchase. These codes can only be produced when the chips on the cards communicate with the new EMV terminals. This level of sophistication was absent from the old magnetic stripe system.
Shifting to the chip card system initially brought about some technical and behavioral concerns. Although credit card processing has not been substantially changed by the shift, there has been a learning curve for consumers plus longer lines at the register in some stores.
The initial terminal woes are being alleviated by smart practices. When European merchants switched to the chip card system years ago, they also went through some growing pains; however, those were eventually overcome. The same can be expected to happen in the United States as MasterCard plans to roll out M/Chip Fast, which is an enhancement that will speed transactions at the register. This enhancement will hopefully be in place in time for the busy holiday shopping season.