The Battle for Top of Wallet
In the recent Aite/ACI global consumer fraud survey, a few key points jumped out at me from the North American statistics:
1. 2 in 5 cardholders have experienced fraud in the past 5 years in the USA
2. Over half are very concerned about the loss of their financial identity, after being impacted
3. Over 60% who were impacted by fraud or a breach-related reissue are likely to use that institution’s card less
While it’s debatable that the #2 and #3 points are based in the day-to-day reality of card fraud (where complete account takeover in the USA is rare, in the event of a card-related data breach), perception is reality. People feel threatened when they have their bank or credit card accounts raided to buy things they didn’t authorize, and this vulnerability is something that some of the major issuers are now using as a marketing strategy… tell me that you have not seen any television commercials recently leveraging this fear. The problem here is that it is broadcast to both consumers as well as fraudsters.
And I’m not sure this is the best way to go about it, announcing that our institution has the best security and throwing down the gauntlet. With this approach, you might as well paint a target on your back. The attitude of “come get some” will certainly attract both the right and wrong kinds of attention. Hackers love a good challenge and will rise to the occasion. Without being so public, you can still make the point that security is paramount to your brand and have it known by your accountholders.
So the USA is the last G20 nation to sit at the EMV table, but that doesn’t mean we can’t take advantage of the EMV dinner. The Fed has recently cited another Aite study showing EMV issuance forecasts for Q4 of 2014. They estimate 70% of credit issuers will have a chip on their cards, while 40% of debit cards may have this technology. What’s particularly interesting is that 40% of terminals are forecast to be compliant. That’s great news, and can help to reduce vulnerabilities of retailers significantly, contributing to a lower likelihood that consumers will feel the need to move a reissued or fraud impacted card to back of wallet.
As suggested in the January blog post, this was and continues to be a segmentation opportunity, and institutions can make security a point of this EMV roll-out strategy, illustrating that accountholder protection is a priority and is taken seriously. To use this moment as a mechanism to educate the customer on what is happening, why and how the institutions respond is aligned with maintaining top of wallet with their customer.
So the picture becomes clear… moving to the Chip and PIN standard will set an example, making a statement to your cardholder, respective to your security posture. The EMV train is already on the tracks; it’s time to board and remain top of wallet.
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