The holiday season from Thanksgiving to the end of the year is a boon for retailers, most of whom see a spike in sales volume. According to the National Retail Federation, sales during this period can account for about 30 percent of a retailer's annual sales volume. However, just over one year after the adoption of the EMV standard for credit and debit cards in the US, could EMV issues derail the traditional holiday spirit?
EMV Channels in Physical Stores
According to the Strawhecker Group, brick-and-mortar retailers in the US have been slow to adopt the EMV standard. On the anniversary of the deadline for the adoption of the EMV standard, just 44 percent of card-accepting merchants had EMV terminals and only 29 percent could accept chip-based transactions. Many continue to rely on the use of signatures rather than the more secure PIN authentication method.
But even as the US retail sector creeps slowly towards acceptance of the new standard, EMV issues are changing the face of retail fraud. Recent research by pymnts.com and Forter shows that instances of fraud have jumped by 137 percent over the last four quarters, and are now responsible for $7.30 in losses for every $100 made in sales across the entire retail sector. It reports that some fraudsters are cashing in on the tardiness of the switch over to the more secure EMV standard with last-ditch efforts to use cloned payment cards.
EMV Issues for Online Channels
However, EMV does little to secure eCommerce sales, where rates of fraud are soaring. For digital goods, which are almost exclusively sold via the online sector, fraud rates have increased by 168 percent, accounting for $10.80 for every $100 in sales.
Use a Fraud Protection Service
Online retailers need to be wary of falling prey to fraudsters, especially during the lucrative holiday season. The use of a fraud protection service can help significantly in reducing the burden of detecting and managing fraud. Such services are increasingly employing behavioral analytics to detect fraud. They use a combination of machine learning, human intelligence, and billions of transactions passing through their service in order to detect patterns of behavior that are likely indicative of fraud. This includes the use of device fingerprinting for PCs, laptops, tablets, and smartphones for authentication. This is becoming especially important as sales via mobile channels are soaring and is important in managing the growing incidence of chargebacks via remote sales channels.
Without such a service, many retailers manually review far too many orders and incorrectly reject legitimate orders. With the use of a real-time fraud protection service, more accurate decisions can be made more quickly. This can give online retailers peace of mind, especially since so many orders are expedited during the holiday season as people wish to purchase gifts for friends and family on a timely basis, expecting orders to be quickly fulfilled.
EMV requires a new way of thinking if fraud is to be defeated. Traditional fraud protection tools are simply not up to the task, especially over the hectic holiday shopping season.