There is a misconception about the challenges we are facing in payments. Whilst it is well recognised that there is a significant global fraud problem across the payments landscape, payment fraud is not equally distributed. Payment card fraud has migrated to the internet.
Not long after squashing the millennium bug, the UK sailed away into the uncharted waters of Chip and PIN. Whilst it was certainly and exciting time in the evolution of payments – for some of us at least – the adoption of EMV went a long way towards solving the growing problem of face-to-face plastic card fraud. As a result of chips and PINs, plastic card fraud in the UK plummeted and this effect was subsequently replicated abroad. Payments on the internet at that time, compared to current transaction volumes, were few and far between. The cost of internet fraud was very low and therefore not considered worthy of any particular attention.
The problem was, and is, that the 16-digit PAN and the 3-digit CVC (when it is used) is not fit for the transaction processing world of the 21st Century.
Underlying payment fraud problems relate primarily to the weakness of the e-commerce payments transaction structure, and whilst many of the so-called clever, alternative solutions may indeed look clever and alternative at the front-end, they generally rely on the same old “card on file” processes at the back-end. Ultimately, this is all smoke and mirrors … tweaking the front-end does not make the underlying problem go away!
Card payments and card technologies are not going anywhere, anytime soon, so the problem needs to be addressed. The solution to rising card fraud needs to focus on the card fraud problem directly, and not simply obscure it by introducing alternative payment options to the consumer and the merchant.
In the late 20th Century, the growing card fraud challenges in the bricks and mortar world were limited by the introduction of EMV, and it works everywhere – nearly! In the 21st Century the same growing fraud
challenges in the digital world could be resolved using that same tried and tested approach.
It’s time to introduce the power of EMV into the world of e-commerce. The technology exists to support this and history has shown that it works.
I have a plan!