What do we want? EMV! Where do we want it? Over there!

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27 August 2015
Gareth Lodge
In my last post, I talked about the experience of using my credit card in the US, and how just inconsistent it feels. Some of it was undoubtedly tied to security – using photo ID or entering zip codes - though I'm far from convinced that they provided any security at all. In some conversations we’ve had, there has been a feeling that US fraud is actually manageable at an industry level – a belief that they are in line or better than in many other countries. Yet the recent figures from Nilson seem to paint a very different picture. Whilst accounting for 21.4% or $6.187 trillion of total volume last year, the US accounted for 48.2% or $7.86 billion of gross losses worldwide on plastic cards. Zil has – and will! – discuss the implementation of EMV at length with anyone, so I won’t discuss that here. What struck me was how ineffective the checks were currently. As a consumer (rather than a payments geek) it struck me:
  • Asking for zip code as authorisation seems pointless – if I’ve stolen a purse or wallet with cards in, I’m likely to have either the zip code already or have enough info to find it within seconds on the internet
  • Asking for a signature, yet not even checking it seems odd. Perhaps I have an honest face or perhaps the risk didn’t warrant the effort
  • Photo ID, at least for non-US, seems pointless. How many people can spot fake ID, or know what a, say, Latvian national ID card looks like?
Another thought that strikes me is that the figures probably hide some other issues too. Traditionally, a third of UK card fraud takes place overseas (in 2014, £150m of £479m). And given that most other countries have EMV, of that, the majority takes place in the US – it has been ranked the country with the highest losses every year for as long as I can find records for. I suspect the figure above does not include this. The volume of fraud then that could be cut by EMV in the US would seem to be even higher. Whilst I know it's not that simple, the US “accounts” for over 5% of UK card fraud. Full EMV in the US wouldn’t reduced this to zero – but equally, even if it halved it in the top 10 countries which lose most to the US, the reduction in fraud would easily be in excess of £100m a year. Visitors to the US aren’t just wanting the experience to improve, they’re wanting to stop paying for fraud that takes place in the US as well.

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