It seems like we’ve heard the word “cliff” overused recently to describe a number of doom and gloom situations from an HBR article describing Novartis’s “Patent Cliff” to the impending “Fiscal Cliff” here in the US. Well, since cliff talk sounds like fun (and includes other fun words like crag, precipice, and aerie), I thought I’d discuss another impending cliff here in the US that is only a few years away. This cliff shows up as a direct result of the deployment of EMV, and we’ve seen it in many other locales.

Chip, by Declan Jewell

It’s the Card-Not-Present (CNP) fraud cliff.

Earlier this year, King (2012) released a compilation of information discussing Chip and PIN’s impact to fraud in a number of global locales. For the purposes of this CNP Fraud Cliff discussion, I want to focus only on Canada and the UK. In both cases, an initial drop in fraud happens and then increases while the fraud channels switch to cross-border and CNP fraud.

Granted, this is a global issue, and as the US is the last major market to adopt EMV some of the cross-border issues in the UK and Canada won’t necessarily manifest themselves here. That said, one place they definitely will manifest themselves is in the e-Commerce and CNP fraud channels. What this means is that any institution (globally) reliant on the CNP acceptance channel is going to see a tremendous uptick in fraud attempts (and successes) as EMV adoption grows in the US.

Merchants must think about how they handle fraud detection today and begin to invest in technologies and solutions that prepare them for the onslaught of fraudulent transactions that are surely headed there way as counterfeit cards and cross-border card present fraud declines with US EMV adoption. In addition, merchants should consider deploying additional fraud prevention techniques methodically and gradually such that their customer experience transitions over time.


King, D. (2012). Chip-and-pin: Success and challenges in reducing fraud. Paper presented at the Retail Payments Risk Forum, January.

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