The switch from mag stripe cards to chip-embedded cards is expected to have a dramatic effect on fraud, but experts cautioned it will not stop all plastic card fraud.
Michelle Thornton, director of product development for CO-OP Financial Services, Rancho Cucamonga, Calif., said the No. 1 benefit will be seen in counterfeit card fraud.
"EMV technology makes it virtually impossible for criminals to produce counterfeit cards," she explained. "Still, we are cautioning credit unions to pay close attention to online transactions going forward. We expect fraudsters to shift their focus to attempted online fraud because duplicating EMV cards is incredibly difficult."
According to a recent study by the Hartford, many small businesses haven't yet adopted EMV, but that is likely to change.
The liability shift, which officially occurred on Oct. 1, will incentivize merchants to upgrade their systems to support other emerging technologies, such as near field communication (NFC) used in the new mobile wallets, Thornton added.
"I think most people agree criminals will move to online fraud or other card-not-present fraud, because that is what happened in other parts of the world when those countries moved to chip cards," she said.
Jamie Topolski, director of alternative payment strategies at Fiserv, likewise said there is an expected increase in card-not-present fraud.
"But that fraud has been a problem for years," he said. "Criminals might try more online or telephone fraud. I expect they will track where the holes are where they can still use mag-stripe cards; where the merchants are not ready. The laggard merchants are the ones that are going to get hit."
