EMV Rollout Initially Boosting ATM Fraud, but Could Eventually Slow It
With the U.S. rollout of EMV making it harder for fraudsters to target merchant POS systems, thieves increasingly have set their sights on ATMs. But cash machines won’t be such an easy target for long, as the same technology that has increased POS security is steadily making its way to ATMs.
Just over a year after the payment networks’ fraud liability shift kicked the rollout of EMV into high gear, the technology already has helped merchants significantly reduce their fraud losses. Retailers who activated chip-enabled terminals by April 2016 saw a 54 percent average decrease in counterfeit card fraud costs compared to April 2015, according to Mastercard.
But as life has gotten more difficult for criminals targeting POS systems, many have shifted their focus to ATMs. The number of ATMs compromised by criminals in 2015 skyrocketed by 546 percent over 2014, and was the highest yearly total ever recorded, according to FICO. (FICO declined to disclose specific numbers.) However, ATM operators soon will be subject to a fraud liability shift of their own, providing extra incentive to ensure their terminals are EMV-equipped. Mastercard has set a fraud liability shift deadline of Oct. 21, while Visa’s liability shift will take place in October 2017. Mastercard projects 40 percent of ATMs to be chip-equipped by the end of this month. And while the merchant rollout of EMV was beset by some snags that hindered adoption, ATMs should be a comparatively smooth road—largely because many are owned and operated by large financial institutions. JP Morgan Chase and Bank of America—which collectively operate about 34,000 ATMs—have said that most of their machines are already EMV-equipped.
Many consumers, however, still don’t have chip-enabled debit cards because issuing banks initially concentrated on credit cards. According to Mastercard, about one-third of its U.S. debit cards are EMV-equipped, compared with 88 percent of its credit cards. Meanwhile, 42 percent of Visa-branded debit cards have chips, compared with 64 percent of Visa credit cards.