New Report Demonstrates Need for Choice and Innovation in Order to Prevent Payment Fraud

Electronic Payments Coalition | November 15, 2017

Today, the Electronic Payments Coalition (EPC) released a report that found multiple dynamic fraud technologies are necessary to combat payment-card fraud.

EPC analyzed information from 20 countries that have varying levels of EMV adoption and use a mix of PIN and signature authentication. EPC found that chip-enabled smartcards—also known as chip cards—have dramatically reduced counterfeit card fraud. In countries where chip cards comprise at least 75 percent of payment cards, counterfeit fraud has declined by 84 percent over the last 11 years—even as the number of in-store transactions has increased 21-fold.

The report also examined the use of PIN and signature authentication, with research showing “there is no clear relationship between total card fraud and a country’s preference for using signatures or PINs” in conjunction with payment cards. This point emphasizes the need for choice—and not a government mandate—when it comes to payment-card security.

“This report confirms what we’ve said all along: You can’t rely on a single security technology to effectively protect consumers. Everyone involved in these transactions—customers, retailers, banks, and processors—must work together to prevent future data breaches and stop increasingly sophisticated criminals from stealing sensitive financial information,” said Molly Wilkinson, executive director of EPC. “Polling shows consumers trust financial institutions more than anyone else involved to develop new technologies to protect their financial data, but everyone in the payment system should be responsible for implementing these new tools and protocols. This includes retailers, who are not currently held to similar standards as financial institutions like banks and credit unions.”

This research demonstrates a one-size-fits-all approach is not the solution for data security and underscores the importance of innovation like tokenization and biometrics. In fact, seven in ten voters agree and say it is likely a more secure way to pay for goods will be introduced over the next few years, according to recent Morning Consult survey data.

Banks, credit unions, and other financial institutions are investing millions of dollars in new technology in order to better protect consumers from data breaches that compromise their sensitive information. Four times as many voters trust financial institutions over retail stores to develop new, more secure payment technologies, according to the same Morning Consult poll.

With technology constantly improving to stay ahead of evolving criminals, EPC urges the government to support a dynamic data security strategy which relies on several tools to protect consumers and authenticate payments. Mandating one static technology, such as PIN, is a disservice to consumers who deserve access to the latest innovations and value their ability to choose how they pay.

To view the full study, click here.

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