The U.S. is the last G20 country to transition to credit cards secured with EMV chip technology. While initiating the transition has taken awhile, industry experts shared in Forbes that they believe that 70% of U.S. cards will have EMV chips by October 2015, because this is when the responsibility for card losses on magnetic-stripe cards shifts to retailers.

EMV is an abbreviation for Europay, MasterCard and Visa. These are the three companies that developed the global standard for cards equipped with computer chips and the technology needed to authenticate chip-card transactions. According to, there is a substantial difference in security between magnetic-stripe and EMV-chip cards. Magnetic-stripe cards contain data that does not change. When someone accesses this data, sensitive card and cardholder information can be used to make purchases. Consequently, magnetic-stripe cards are key targets for counterfeiters who convert stolen card data to cash. Counterfeit cards account for 37% of all U.S. credit card fraud according to a 2014 report by Aité Group.

Unlike magnetic-stripe cards, every time an EMV-chip card is used to make a payment, the card chip generates a unique transaction code that can only be used for that transaction. If someone steals the chip information from a specific point of sale, typical card duplication will not work. The transaction code cannot be used for a new transaction. So, the card is denied.

EMV-chip cards do provide increased security against counterfeiting, but experts like Julie Conroy, research director for retail banking at Aité Group, expect fraud to shift to “card not present” (CNP) forms. Card not present fraud involves using stolen card numbers to purchase items online. In the United Kingdom, CNP fraud rose 79% in the first three years after the country switched to chip cards, and it more than doubled in Australia and Canada. The most attractive things CNP criminals purchase are high-value items that can easily be resold or converted to cash (e.g., jewelry, gift cards and electronics).

The approaching reality of increased online fraud means U.S. retailers will need to improve controls to ensure that they know that their customers are authentic. This typically involves new risk-management technologies and additional security questions or passwords. For consumers, there are two key recommendations for reducing online fraud. First, closely your monitor credit card bills in order to detect suspicious charges. Second, review your credit reports periodically to ensure they’re accurate.


Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti