As I travel the globe, from financial institution to financial institution, I am often asked what could change once the United States migrates to EMV card usage, insights I love to share. And in one area – the world of pre-paid cards – I think there will be some changes to where fraud moves to compensate once the hackers are frozen out of the card world.
Since NICE Actimize happens to be one of the largest fraud solution providers in the world for pre-paid providers, this gives me a great opportunity to hear the ongoing insights regarding the plans and thoughts of the pre-paid product community. With that input, my eyebrows have been raised recently with respect to the movement to EMV here in the United States and its potential effect on the pre-paid card world.
If you think about the pre-Target data breach world, the topic of EMV was addressed by the U.S.-based media from the perspective of a US citizen traveling abroad and encountering an often painful customer experience when it came to card transactions. Some of the banks, which had frequent global travelers, even offered EMV pre-paid cards to their customer base in order to head off any negative experience. A brilliant move, the pre-paid category was among the first to really look at security of the physical card, loading the card, and transactions on the card to secure customer trust and confidence.
As fraud specialists, we know that fraud tends to behave and migrate like a virus, always moving to the weakest immunity point. As EMV starts to take hold here in the US, I suspect that fraud will move through to the banks and portfolios that are not EMV ready, and “card not present” will be a migration point. Stolen cards will rise, account takeover on phone and digital channels will increase, and if pre-paid portfolios are not EMV ready – well, we all know the story.
Another concern for me is the effect of the business model on the readiness of the pre-paid card industry – some pre-paid products like gift cards or closed-loop card are centered on a one-time use, inexpensive card model. With the debut of EMV, costs to produce more expensive chip cards will certainly become a consideration for many pre-paid producers and will certainly affect the speed of adoption for EMV chip.
So, as we approach the transition to EMV, here are a few concepts that pre-paid providers should think about:
- If you do not have EMV plans, begin the process. The first provider to the market will be the leader.
- Ensure you are shoring up your card-not-present models, don’t play catch up.
- Bring in digital data for your onboarding, enrollment and card-loading process.
- Build a team to create a fraud observatory. As fraud changes, change your rules, policies, and models. Pivot, pivot and then go.
- Use the fact you have EMV on your card as a market advantage – portray that safe and secure payments are your priority.
Speaking of pre-paid cards, I have my own Visa pre-paid gift card in my bag, so I think it is time to have a nice leisurely break and get a “latte on the house” at my favorite coffee shop down the street, all the while hoping that this time next year, I see a shiny new chip next to my latte to go.