EMV chip card arrival to U.S. shores does not mean fraud is going away. It will most likely shift to new channels and verticals post EMV implementation. Past EMV transitions throughout the rest of the world have shown that EMV plays a big role in reducing in-store fraud. Consequently, fraud flows to other channels such as Card-Not Present (CNP) environments where cards and users are more difficult to authenticate, as well as SMB in-store merchants where hardware and software has not been installed. In this post we'll look at some of the impacts of EMV chip card migration in the U.S.
The U.S. will Most Likely See an Increase in eCommerce Fraud
The U.K. saw an increase of 62 percent in card-not-present fraud after its implementation of EMV, as criminals shifted their efforts to other channels of least resistance*. France, Canada and Australia all cite higher than 50% more instances of CNP fraud in the years following EMV implementation.
Prepaid eGifts will become a particularly vulnerable fraud target. Online gifts require little information to send and receive, and as a result become a high-value target for fraudsters. The growing trend of electronic gifting helps satisfy consumer demand for an instant product that is sent to anyone’s inbox around the world in seconds. While physical gift card shipment usually takes a few hours or few days to process the merchant has time to verify the validity of the receiver. Most fraud decisions about eGifting have to be made in real-time.
Much has been written about the impacts of the recent U.S. October 1, 2015 Fraud Liability Shift milestone and the migration to chip cards. Some retailers geared up for the fraud chargeback liability shift long before October 1st by upgrading POS software and hardware systems to accept the new EMV chip cards. Most U.S. merchants are still sitting on the EMV sidelines and have not made the commitment to upgrade.
When considering EMV acceptance upgrades retailers need to look at their total risk profile when it comes to fraud, security, and PCI Compliance. The EMV chip card standard was developed as a way to minimize in-store fraud. After October 1, 2015 card present merchants will be accepting more risk as transactions made with counterfeited EMV cards will now be the merchant's responsibility if it decides not to accept EMV chip technology at the POS. The benefit of the investment in new payment system upgrades needs to outweigh the risk of fraud and customer perception for the merchant.
This move is a major milestone in FIDO's and fingerprint biometrics' adoption in the mainstream consumer authentication market. Forrester expects fingerprint authentication will greatly improve the customer experience - no more fumbling with hard-to-type passwords on small smartphone keyboards. It's important to note that matching the fingerprint to authenticate the user happens in the mobile application on the mobile device. As such it is not a true two factor, strong authentication where the match happens on the server side.
For US online adults, wearable technology is no longer the stuff of myth. Over the past year alone we’ve witnessed the launch of the Apple Watch and iterations on early wearable products. Wearable devices are now making their media cameo across a variety of channels and topics ranging from politics to pop culture.
According to Forrester’s Consumer Technographics® survey data, around one-fifth of US online consumers use a wearable gadget. While the adoption rate is higher among young, wealthy males, wearables are already breaking into segments that aren’t typically considered among the early adopters. Most individuals tend to use the technology for health- and fitness-related activity; however, consumers demonstrate a growing interest in using wearables for several different functions:
On 6th October, 2015 Microsoft launched a number of new devices into the market, including the Microsoft Surface 4, Surface Book, and a number of new Lumia smartphones. While the hardware is certainly attractive, that is not enough to peak my interest, nor that of my clients. What is interesting, however, is the introduction of the Microsoft Display Dock and Continuum for phones. This new technology allows users to connect their smartphone to a screen, keyboard, and mouse and use the smartphone on a large screen – running universal Windows apps designed for the PC and phone. Suddenly the power of Windows 10 as a universal operating system can be realized.
While not a complete PC experience, it will be enough for a lot of users within your business. Most firms have employees that only require casual PC access (think site staff in construction firms, store management in retail, traveling sales staff, factory floor management teams etc). At present we spend more than we need to in order to serve these employees – often providing a dedicated PC or laptop for them – along with their smartphone. In a world where universal Windows apps are readily available, many or all of these users could be given a smartphone and a Display Dock to use with a screen on-site or at home – helping you save money and direct this spending perhaps to rewriting your internal applications as universal Windows apps. Even a communal screen and dock would be enough in some workplaces.
It’s no secret that marketers are under increasing pressure to be accountable, while an increasingly fragmented media environment compounds the perennial challenges of marketing measurement. Meanwhile, consumer insights pros are improving skills and gaining ever more powerful tools to harvest and analyze the data from web, mobile, and social marketing. The scale and speed requirement of today’s marketing world strained legacy marketing measurement approaches like attribution and marketing mix modeling .
We knew the convergence of different marketing analytics approaches was inevitable so earlier this year, my colleague Jim Nail and I began sharing our ideas on where marketing measurement was headed. We agreed each approach provides only a partial answer to the marketing ROI puzzle and they shared enough methodological similarity that merging them was plausible.
Yesterday morning, many of us in the United States awoke to some troubling news: the European Court of Justice (ECJ) had ruled that the Safe Harbor agreement is no longer valid. Security & risk (S&R) and data management folks kicked into high gear. Customer insights and digital marketing teams...? Well, the news slipped past mostly unnoticed. That's a mistake.
Let's start with a primer on Safe Harbor. If you're a multinational company doing business in Europe, Safe Harbor is the agreement under which you've been allowed to bring European customers' data back into your servers in the US for purposes of targeting, analytics, campaign management, etc. If you work with a US-based database MSP, digital or CRM agency to manage customer data, they've likely been relying on the same agreement. It's a nearly 20-year old agreement that was put in place to bridge the gap between Europe's strict data protection laws and America's relative dearth of them.
Now, that agreement has been deemed invalid, which means that every company serving European customers needs to reexamine its data practices. Of course, this is primarily the purview of our technology management peers. But customer insights professionals need to partner closely with them on two fronts:
Speak up about your third-party data sharing practices. This includes sharing between business partners (for example, passing customer data to a firm that administers your loyalty program or manages warranties), sharing CRM data with digital marketing vendors, and even using third-party tracker on your website that collect IP addresses. Any third party data sharing could come under scrutiny from the European Data Protection Authority, so you'll want to have a consent-based model for collecting and sharing that data soon.
As CIOs, we all know digital disruption is happening at a rampant rate. The challenge we face is moving it from theory to reality. An executive at a client company recently posed the following questions to me: “How do you actually innovate and defend against this digital disruption without blowing up the budget? How do you really do that?”
For me, there are definitely a few steps that take this often discussed CIO requirement from the abstract to the concrete:
Are you close to your customers?
Everyone has customers of some kind, including B2B. Do you know where the pain points are in your customer experience? Where the opportunities are to innovate? You’ve got to understand this dynamic and the best way to start that is with customer journey mapping. Follow it up by keeping this “conversation” going by leading or staying involved in a regular customer testing and feedback effort or program. Above all, get out and talk to customers!
Can you innovate on your own mainstream platforms, quick and dirty?
If you can’t innovate easily on your major internal platforms — weeks or days, not months for moderately/small-sized innovations — digital disruptors and likely your direct competitors both have a significant leg up on you. This year alone, we’ve launched 35 small-to-medium, innovative improvements to our business by taking advantage of our SaaS platform. Business moves too fast to wait for months.
Do you use the same tools that startups use to go fast?
My mission at Forrester is to help ebusiness executives transform the role of payments from financial utility into an engine for customer engagement, revenue growth and improved customer experience.
A barrage of new innovation and business models are upending how consumers and businesses make and receive payments. If merchants and businesses do not consider or implement these new innovations they risk losing customers and ultimately relevancy.
Customer obsessed businesses can turn payments disruption into business advantage. Success hinges on making technological and organizational shifts that turn the view of payments from customer transactions to an engine for customer growth.
Businesses must consider the following challenges if they want to turn payments into customer advantage:
Embrace mobile and emerging payments
Gain more customer relevancy through collected payment data
Provide new tailored customer experiences and services based at point of purchase
Reduce risk and secure the shopping experience from data compromise and fraud
Leverage payments for operational advantages
My role will be focused on how to make payments more operative and strategic through the lens of “Transforming the Customer Experience,” “Accelerating Your Digital Business,” “Embracing the Mobile Mind shift,” “Turning Data into Customer Insights.” I look forward to expanding the aperture of these topics and working with you to transform the role of payments in your organization.
If you're a brand-side marketer whose company uses word of mouth marketing, could you take a few minutes to complete our survey? It won't take long -- and to thank you for your time, we'll be sure to send you a copy of the aggregated data. We appreciate your participation!