With mobile banking, person-to-person payments, and mobile wallets, mobile is rapidly becoming the go-to channel for financial activity. All of these activities feature instantaneous response with minimal friction. This expectation has strong implications for any changes to the transaction experience. Any new security mechanisms at the point of sale should be friction-neutral – meaning that at worst they impose no new burdens on cardholders. The payments industry needs to explore an array of authentication solutions at the POS incorporating rich customer intelligence, friction-free risk evaluation, and on-device authentication.
Fraud at POS will not disappear overnight. While the EMV chip card standard is effective at mitigating counterfeit card fraud, it is limited by the slow rollout of chip-enabled terminals. EMV cards in the U.S. continue to bear magnetic stripes, leaving the door open to counterfeiting activity facilitated by fallback transactions. POS card fraud is predicted to decline just 30% between 2015 and 2019, from 2.3% of consumers impacted to 1.6%.