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The Impact of the Microchip on the Card Frauds

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  • Ardizzi, Guerino
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    Abstract

    The issue of frauds through payment cards has received a great deal of attention from authorities. A large share of card frauds can be ascribed to the phenomenon of counterfeiting of debit cards, widely used payment instrument in “face-to-face” transactions. With the advent of the Single Euro Payment Area, the European banking community has shared and almost reached the ambitious goal of replacing all the cards (and accepting terminals) with chip compatible ones, which are supposed to be harder to clone than the magnetic stripe card. Using a bi-annual balanced panel data of over one hundred Italian banks, in this paper we estimate for the first time the real impact on card frauds caused by the chip card migration. The results confirm the positive effects of the new technology: the ratio between fraud and ATM-POS transactions (card fraud loss rate) is reduced significantly if the chip card is present.

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    File URL: http://mpra.ub.uni-muenchen.de/41435/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41435.

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    Date of creation: 20 Jul 2012
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    Handle: RePEc:pra:mprapa:41435

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    Related research

    Keywords: fraud; debit card; payment instrument; security; chip; technology; prevention; EMV; SEPA;

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    1. Anneke Kosse, 2012. "Do newspaper articles on card fraud affect debit card usage?," DNB Working Papers 339, Netherlands Central Bank, Research Department.
    2. Anneke Kosse, 2013. "The Safety of Cash and Debit Cards: A Study on the Perception and Behavior of Dutch Consumers," International Journal of Central Banking, International Journal of Central Banking, vol. 9(4), pages 77-98, December.
    3. Koenker, Roger, 2004. "Quantile regression for longitudinal data," Journal of Multivariate Analysis, Elsevier, vol. 91(1), pages 74-89, October.
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