Giant ATM Fraud Highlights Need to Accelerate EMV Standards in US

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Bill Hanifin Managing Director, Hanifin Loyalty LLC

Posted on May 16th 2013

Giant ATM Fraud Highlights Need to Accelerate EMV Standards in US

A few weeks ago, we chronicled the progression of EMV implementation in the US. In our post, we patted Richard Sanders on the back for predicting the chip-card development path in the US over 8 years before it has come to be a reality.

One interesting note in the story was substantiated in the news last week.

In our post, we mentioned that ATM’s must be ready to accept EMV cards by 2017, about two years behind the deadline for liability shift at merchant point-of-sale. Even though securing merchant POS has advantages tied to fraud reduction, the major card associations are being cautious to accelerate the rollout of Chip and PIN at merchant point-of-sale so as not to push fraud to ATM’s.

During Card Forum this year, Stephanie Ericksen, Head of Authentication Product Integration, VISA INC. shared “the company is not pushing to accelerate the rollout of Chip and PIN at the point-of-sale as we suspect that remaining fraud volumes will run full speed ahead for unprepared ATM machines.

Last week, a gang of cyber criminals perpetrated a $45 Million fraud by hacking their way into prepaid card systems at several banks and extracting their take via ATM machines in 26 countries. The US portion of the scam took place courtesy of ATM’s mostly in the Northeast, giving too much publicity to the ensuing spending spree and clearly illustrating the risk that needs to be addressed via the EMV standard.

I’m not sure to what extent the current implementation plan can be accelerated, but it certainly seems that global criminals are going to make the most of the remaining time window. Electronic theft can’t be entirely washed away by Zero liability policies on cards as commonly offered by the associations. There is a residual emotional and mental impact from these events and repeated instances could send consumers into a fresh wave of negativity, something we don’t need in the US economy today.

Do you think it might be time to put our mobile wallet application development aside in favor of speeding up the protection of our current system of payments?

whanifin

Bill Hanifin

Managing Director, Hanifin Loyalty LLC

Bill Hanifin is Managing Director of Hanifin Loyalty LLC, a full service agency specializing in Loyalty Marketing, Customer Strategy Development, and Lifecycle Marketing solutions. The company delivers thought leadership translated into practical ROI-driven solutions. Hanifin Loyalty has led the evolution of traditional loyalty marketing to incorporate social media and other digital communications channels to engage and develop trust with Consumer 2.0 - today's digitally connected consumer. Hanifin Loyalty provides Strategic Advisory services as well as Data Analytics, Payments Consulting, Customer Experience design and management, and Marketing technology evaluation and RFP management. Within our analytics practice, we build program measurement plans and financial models to assess loyalty program profitability and to manage financial liability. Bill serves as North American Contributing Editor for The Wise Marketer, is a member of the Retail Wire Brain Trust, and publishes thoughts on customer centric marketing via his Loyalty Truth blog www.LoyaltyTruth.com. He is a Founding Member of the Customer Strategy Network (www.CustomerStrategyNetwork.com).

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