Fraud still retailers’ top payment issue – research

With no signatures, no PIN and no biometrics, what we have right now is no authentication at all


Fraud still retailers’ top payment issue – research. Source:

Three years after the switch to new chip-based credit and debit cards, a study released by the National Retail Federation and Forrester says payment card fraud is still a top concern for large U.S. retailers as criminals move their activities online.

The report found that fraud was the top payment-related challenge faced by retailers, cited by 55% of those surveyed. The reason is largely that Europay-MasterCard-Visa chip cards have moved payment card fraud away from stores and toward online transactions, the report said, citing a Forrester study showing a 13% increase in online fraud last year. A Federal Reserve study said online fraud rose from $3.4 billion in 2015 – the first year retailers were required to accept chip cards or face an increase in fraud liability – to $4.6 billion in 2016 and were an “increasing concern.”

In a post-EMV world, fraud is shifting from in-person to e-commerce channels, so retailers have been busy bolstering their defenses to mitigate the increasing costs and risks of e-commerce fraud
NRF/Forrester report

To help fight fraud, the report found that retailers want better authentication of purchases no matter where they take place and that 33% have implemented 3D Secure, a system marketed as Verified by Visa or MasterCard SecureCode that is intended to help authenticate online purchases.

For in-person purchases, 51% of merchants said biometrics would be the best way to verify transactions, and 53% expressed interest in implementing forms such as the fingerprint and facial recognition available on smartphones. But with that technology limited to phones rather than cards, 46% said personal identification numbers would be the best currently available way to approve card transactions.

For purchases made with cards, 95% of retailers said requiring PINs would improve security and 92% would implement it if it were available. While EMV cards in other countries are chip-and-PIN, virtually all EMV credit cards issued by U.S. banks have been chip-and-signature with PIN available only on debit cards. And the major credit card companies stopped requiring a signature last year.

The chip in an EMV card makes it very difficult to counterfeit the card, but it does nothing to show whether the person trying to use the card is the legitimate cardholder. If we want to stop card fraud, we need a better way of authenticating users and it should be one that’s affordable, easy and safe. Someday the answer might be biometrics or technology that has yet to be invented but, in the meantime, we know PIN can stop criminals dead in their tracks. With no signatures, no PIN and no biometrics, what we have right now is no authentication at all
Stephanie Martz, NRF Senior Vice President and General Counsel

SEE ALSO: How to use a credit card in a smart way

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