Visa: Some merchants see dip in fraud thanks to chip cards

(usatoday) - The new chip-enabled cards flowing into the U.S. marketplace have already made a dent in fraud, with some of the biggest merchants seeing a dip of more than 18% in counterfeit transactions, according to Visa.

Among the 25 merchants who were suffering the most instances of counterfeit fraud at the end of 2014, five that began processing credit and debit cards equipped with the new EMV technology saw those infractions fall 18.3% as of the final quarter of 2015, says Stephanie Ericksen, vice president of risk products at Visa. Meanwhile, five of those merchants who were not yet equipped to handle chip-enabled cards saw an increase in fraudulent transactions of 11.4%.

“We’re seeing EMV is having a positive impact on counterfeit fraud,’’ Ericksen says. “Merchants who implement chip, their counterfeit fraud is going down, while those still finalizing plans, their counterfeit fraud is going up.’’

The electronic payment industry has long called for adoption of such technology, but a series of high-profile data breaches at companies such as Target have underscored the need for more consumer protections.

Microchip embedded cards, already common in Europe and Brazil are considered a more secure alternative to those bearing just a magnetic stripe because they generate a unique code for each transaction. That makes them more difficult to counterfeit, and helps to cut down on fraudulent uses.