EMV Could Increase Your E-Commerce Fraud Risk

Why Read this Article

You thought EMV was supposed to help eliminate fraud, right? While it will reduce card-present fraud, there is a high likelihood that card-not-present (i.e. e-commerce) fraud will increase now that EMV has been implemented in the U.S. In fact, experts have predicted an increase in online fraud similar to what was seen after the European rollout of EMV. As a merchant, are you prepared for such an increase? This article describes the EMV implementation and gives actionable tips for how online retailers should prepare in order to avoid a potential onslaught of fraud.


What Is EMV and Why Does It Matter?

EMV (EuroPay, MasterCard, and Visa) refers to a global payment standard that encourages merchants to integrate new credit cards that have computer chips embedded in them. Such cards are up to 700 times more difficult to counterfeit than traditional cards and have been shown to greatly reduce fraud for in-person transactions. Brick-and-mortar stores have gradually been installing new EMV card readers over the last few years.

Recently, on October 1, 2015, the liability for fraudulent card-present transactions shifted from the credit card issuer to the merchant (depending on the type of merchant). Now, if a fraudulent transaction occurs with an EMV card and the business in question is not set up to accept chip and pin payments, the merchant can be held liable for the transaction (refunds and chargebacks can still be disputed as usual). It’s important to note that the liability shift does not affect card-not-present (CNP) transactions, however.

Previous EMV Rollouts Offer Cause for Concern

Results from the previous rollout of EMV cards in Europe, Canada, Mexico, and Australia give e-commerce merchants reason to be concerned. While card-present fraud was reduced drastically, the amount of CNP fraud increased 79 percent in the UK and doubled in Canada and Australia.

That means U.S. e-retailers should be very wary of what may be a significant increase in the amount of online fraud occurring in this country now that the rollout of the EMV standard has taken place. In fact, by one estimate, online fraud in the U.S. could increase a whopping $3.3 billion, from $3.1 billion to $6.4 billion.

Tips to Protect Against Increasing Online Fraud

With online fraud potentially rising, U.S. e-retailers will need to be proactive to protect their businesses. Here are some tips to help online merchants protect against increased fraud:

  • Use sophisticated fraud analysis tools: Fraud detection tools can assist in identifying instances of credit card fraud by running transactions through their proprietary software and give you enough time to block such transactions. Two examples of such fraud tools are Signifyd and Kount.
  • Compare the IP address to the billing address: A common red flag in identifying credit card fraud is when the country of the customer’s IP address does not match the country of the billing address.
  • Compare the issuing bank and the billing address: The country of the issuing bank should usually match the country of the customer’s billing address. If it does not, that is usually considered a red flag.
  • Watch for transactions from high risk countries: Some countries have high instances of fraud. You can use lists like the one found here to determine if the shipping address for a transaction is located in a country with high fraud risk.
  • Look out for the use of proxies: Sometimes a fraudster will attempt to use a proxy to hide their actual IP address and show a fake one. There are services that can help identify this practice, including one called Maxmind. You can also look at the time zone of the device that placed the order to crosscheck whether it matches the IP address.
  • Reduce your fraud risk by partnering with an alternative financing provider: There are new consumer finance companies like Affirm that provide online shoppers with alternatives to using a credit card. Affirm offers shoppers installment financing instantly at the point of sale, and requires no credit card numbers that can be stolen. Affirm also takes on 100 percent of the fraud risk.


The move to EMV technology is a work in progress and will require a commitment not only from consumers and credit card issuers, but also from you. As the move to curb fraud evolves, so will the technology to protect your online business and customers.


DISCLAIMER: The views contained in this article are those of Affirm only. Affirm has not received any consideration whatsoever for creating this article. Any brands contained in this article are included as examples only. Affirm does not intend to endorse or promote any brands contained in this article.