Are Chip Credit Cards Decreasing Fraud in The United States? What You Need to Know to Protect Your Credit Cards

In 2015 card issuers began releasing chip credit cards promising that the acceptance of these new credit cards would decrease fraud nationwide. Many business owners were forced to upgrade and replace their point of sale equipment to accept these new cards in the hope of reducing credit card fraud. 

Many retailers were frustrated with costing them hundreds or even thousands of unexpected dollars.  It has been three years since these cards were released so where do we stand? Is fraudulent activity truly down? Was it worth the millions of dollars and headaches that came with such a drastic change?

In December of 2017 Visa, the payments company revealed in an infographic that counterfeit fraud is down in the U.S. at merchants that are using chip-enabled cards.  

As indicated by the Visa press release, fraudulent transactions are down 66 percent in June of 2017 contrasted with June of 2015. U.S. financial institutions have issued 462 million chip cards to purchasers, and 2.5 million, or 55 percent, of U.S. retail locations, are now accepting chip cards. Visa also stated that, as of September of 2017, there were $59.4 billion chip transactions, up from $4.8 billion in September of 2015.

As indicated by Visa in 2016, the quantity of Visa chip cards issued in the U.S. achieved 408.1 million, an expansion of 92 percent. The number of retailers that could accept chip cards totaled 1.81 million toward the finish of 2016, dramatically increasing.  Visa noticed that 82 percent of the retailers that accepted non-chip card terminals were small and medium-sized retailers.

The industry marked the start of 2017 as the first full year that the U.S. had the chip card program in place. Around that time Visa noted that credit card fraud had dropped by 52 percent, and was down 14 percent over-all that first year.

Slow Checkout

In the early stages of chip card transactions, many consumers and retailers were complaining about the time it took to process a transaction.  The time it took doubled and even tripled the time for non-chip card transactions, which increased wait times at the registers. In April of 2016, Visa reported the launch of its Quick Chip for chip cards, intended to accelerate checkout times.  The Quick Chip processing seemed to solve many of the issues making the checkout times closer to non-chip card processing.

What’s Next

As consumers, we’re all used to having to sign the receipt upon purchase. The requirement of obtaining a signature was originally put forth so that the retailer accepting your form of payment could match the signature on the back of the card with the receipt signature.  

But let’s face it when was the last time you had a retailer actually look at the back of your card? Several years ago Visa implemented a new rule for transactions under $25.00 did not require a signature, but most retailers continued to get a signature.

In early January of this year, Visa joined American Express, Discover, and Mastercard in reporting it will eliminate the signature requirement for most charge cards especially chip cards. As indicated by Silicon Beat, Visa’s eliminate should start in April of 2018.  Cards without the chip will continue to require a signature.

If you still have questions or would like more information about any of these topics, feel free to reach out to us.  We provide honest, straightforward, unbiased, representation to save you hours of frustration and headaches. To learn more about how Digital Financial Group can help you and your business, feel free to reach out to us at [email protected] or call 623-764-7471.