February 2016 What’s the forecast for EMV sales and what do we have to look forward to in 2016?


A monthly summary of emerging payment trends and forecasts to help you protect your payments and boost your profits

The topic for February’s edition of  Verifi’s PaymentsTips Newsletter is on the question that is top of mind for many merchants emerging into 2016: What’s the forecast for EMV sales and what do we have to look forward to in 2016?
While many merchants are still feeling the holiday chargeback hangover, others have set their sites on what lies ahead for 2016. Between the  continuously unfolding impacts of EMV – both good and bad – and emerging payment technologies, merchants have more than enough to keep them on their feet this year. This month, we’ll look at payments in the travel industry and the evolution of omni-channel for travel merchants. We’ll also take a look at how banks plan on spending their IT budgets this year…hint: security is key. Speaking of security, EMV chip cards are bolstering it for in-store purchases, however, they may have an indirect impact on mobile wallet popularity and adoption, too. Finally, we’ll look at the emerging risks for payments this year and review how to protect your payments from fraud and chargebacks this year and beyond.


The Evolution of Travel Payments

Mobile and wearable technology has empowered consumers to engage with travel providers throughout their entire trip – a drastic change from the initial booking and purchase-only mentality. This provides ample opportunities for travel providers to expand their offerings beyond core services and into ancillary services to add value to consumers’ entire trip.

In some cases, this will require that the travel provider pass the consumer on to a third-party provider. To ensure a seamless experience, this requires the travel provider to have processes
in place to streamline the passing of consumer information to these third-party vendors. It also requires ways to handle inquiries, customer service complaints and chargebacks. By facilitating storage of payment information (via customer profiles), travel merchants can bypass some headaches, however, the top-notch security procedures will be essential to protect sensitive consumer data throughout the process.
How consumers pay for travel continues to evolve: roughly 20 percent of American businesses today pay for travel using virtual (cardless) single-use accounts. That’s a 13 percent increase over last year.  2016 promises even greater participation in virtual payments, particularly in the hotel arena. One thing is certain – global business travel spending is predicted to close out 2015 with a record high of $1.25 Trillion.


Security a Top Focus For Banks

In addition to adjusting to the overall rise in electronic transaction volumes, banks are focusing on replacing aging legacy infrastructure and fraud mitigation tools. A recent report shows that 70% of retail banks plan to increase spending on security and anti-fraud technologies in 2016.

With the increasing number of ways to pay – from cash and credit to wearables and other emerging payments technologies – banks are highly concern with upgrading security measure to match and beat new threats. About 34% are prioritizing biometrics and location data as methods to heighten security on transactions.
Biometrics can be a great tool for merchants and banks alike looking to use multi-factor authentication to up the security game. Additionally, merchant-Issuer collaboration is a game-changer when it comes to protecting payments across the board.


 Chip Cards Push Mobile Mainstream

The switch to mobile wallets has lagged behind predictions, but EMV might be just the push mobile needs to really take hold as a preferred way to pay. With retailers migrating to more secure chip-card
technology, transactions are taking 3-4 seconds longer. While this seems trivial, it has proven frustrating to consumers who’ve experienced the delay. While Apple, Samsung and Google have led the mobile charge, retailers are following suite. Walmart has recently announced its own mobile app (Walmart Pay) and Target may soon join the ranks.
Mobile wallet technology also addresses a number of security concerns. NFC –technology supported by EMV-capable payment terminals – uses tokenization to replace sensitive payment information with a token during transactions, protecting it from fraudsters and hackers. With the US accounting for almost half of worldwide credit card fraud cases, this technology could help eliminate some of the risk.


Rising Risks Rock the Boat

At just four months into the EMV migration, CNP fraud continues to rise.  Fraudsters continue to seek out the path of least resistance and
the online channel is proving to be it.  Many online merchants struggle to find the right balance between customer experience and security with online purchases. Too much security means a higher cart abandonment rate and not enough security means everyone can check out easily – including the bad guys.
Further complicating circumstances is the popularity of the sharing economy and the infiltrations of nefarious characters in this marketplace. When fraudsters enter into this mix where bidding and auction-based marketplaces exist, they unnecessarily drive up the cost of goods. Another tactic is for these fraudsters to create fake seller profiles and jack up the bidding on a product, finally using a counterfeit or stolen card to “win the bid”, collecting the funds for the “sale.”
No matter how you look at it, merchants need to be on guard moving into 2016. Fraudsters are smarter and as technologically advanced as ever. They will be targeting low-hanging fruit, so merchants without a comprehensive fraud and total chargeback management strategy will be at elevated risk.


Parting Words

It’s clear there’s a lot to look forward to this year – payments advancements and emerging payments technologies continue to shape the payments landscape and will impact a variety of industries in unique ways. Mobile will continue to gain adoption and transform how we look at payments and security. EMV will push fraud online but also push consumers in the direction of the mobile wallet. All changes and developments in payments will be woven together by a common thread: security. As CNP fraud continues to escalate, merchants will need a thorough, layered and customizable fraud and chargeback management strategy to protect the bottom line from dynamic cyber criminals.
Ask us how our Cardholder Dispute Resolution Network (CDRN ™) can help prevent and STOP chargebacks before they happen as well as provide a feedback loop to inform your front-end fraud control tools. Since chargebacks cannot be completely avoided, our Chargeback Revenue Recovery service provides representment expertise so you don’t leave money on the table. We’ll help you decide when to fight and when to walk away, so you can focus on what’s most important – running your business successfully.
Don’t forget…you can now download our updated ebook: What Every Card Not Present Merchant Should Know: Navigating Today’s Challenging Payment Ecosystem? Get it now!
What are your thoughts? Ping us on Twitter (@verifi) with #paymentstips and let us know what you think.