# Post-EMV Effect of More CNP Chargebacks and False Declines

> After the EMV liability shift, CNP chargebacks and false declines rose. See why 32% of declined shoppers never return and how merchants can reduce risk.

TL;DR

After the October 2015 US EMV liability shift, card-not-present (CNP) fraud rose as it had in other markets that adopted chip-and-PIN, pushing fraud away from physical stores and onto online channels. The bigger risk for merchants is overcorrecting: tight fraud controls that raise false declines cost US retailers far more than fraud itself, since 32% of falsely declined shoppers never return. Merchants can reduce risk by studying post-EMV markets like Brazil and pairing chargeback prevention with careful evaluation of borderline orders.

Last October’s EMV liability shift brought the US into the fold as one of the final major economies to make the switch to chip-and-PIN point-of-sale technology. Veterans of EMV shifts in other parts of the world, including the EU and Latin America, warned that a surge in CNP fraud would almost certainly accompany the US EMV changeover, as it had in other markets. So far, the numbers bear this out, with CNP fraud ramping up ahead of the switch.

The good news is that by studying what’s happened post-EMV in other markets, merchants can reduce their risk of higher chargeback costs with minimal impact on the customer experience. The less-good news is that, like any other human endeavor, seeking out and adopting better fraud prevention methods is often left until it becomes a large and costly problem. The bad news is that if those new fraud controls raise the rate of false declines based on broad generalizations about customer behavior, merchants face a new and potentially worse problem.

## Fewer chargebacks, more false declines

Research presented by MasterCard and Javelin found that [32% of customers](http://newsroom.mastercard.com/press-releases/mastercard-activates-real-time-intelligence-to-more-accurately-predict-fraud/#_ftn3) who are falsely declined never shop with that merchant again. That amplifies potential losses over time, especially because many of these shoppers are affluent and well-traveled—the exact type of customer many retailers hope to retain for life. Because false declines carry such a high potential cost, the research found that they cost US retailers 13 times more than card fraud does; it’s important to choose fraud mitigation strategies that combine robust chargeback prevention with careful analysis and evaluation of potential declines.

## Post-EMV lessons from Latin America’s largest market

Based on observations of Brazil’s EMV changeover which took place from 2008 to 2011, there are [[to continue reading at Let's Talk Payments, please click here]](https://letstalkpayments.com/stopping-the-post-emv-domino-effect-of-more-cnp-chargebacks-and-false-declines/)

## Frequently Asked Questions

### What is the EMV liability shift and why did it matter for online fraud?

The EMV liability shift moved point-of-sale technology to chip-and-PIN cards, which made counterfeit card fraud harder in stores. In the US the shift took effect in October 2015. Because in-store fraud became harder, fraudsters moved to card-not-present channels, so online merchants saw more CNP fraud.

### Why does CNP fraud increase after an EMV changeover?

When chip cards make in-store counterfeiting difficult, fraud follows the path of least resistance and shifts online, where the physical card is not present. This pattern appeared in earlier EMV markets such as the EU and Latin America, and the US numbers followed the same trend.

### How much do false declines cost compared to card fraud?

According to research presented by MasterCard and Javelin, false declines cost US retailers 13 times more than card fraud does. The reason is long-term customer loss, since falsely declined shoppers often stop buying from that merchant entirely.

### What share of falsely declined customers stop shopping with a merchant?

Research from MasterCard and Javelin found that 32% of customers who are falsely declined never shop with that merchant again. Many of these shoppers are affluent and well-traveled, which makes the lost lifetime value especially costly.

### What can merchants learn from Brazil's EMV transition?

Brazil went through its EMV changeover between 2008 and 2011, giving merchants a real-world view of how CNP fraud behaves after the shift. Studying that experience helps US merchants anticipate where fraud moves and prepare controls that catch fraud without rejecting good orders.

### How can merchants reduce chargebacks without raising false declines?

The goal is to combine strong chargeback prevention with careful analysis of borderline orders rather than blunt rules that reject broad customer segments. Evaluating potential declines instead of automatically rejecting suspicious-looking orders keeps fraud down while protecting legitimate sales and the customer experience.

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Source: [https://www.clear.sale/blog/post/emv-domino-effect-cnp-chargebacks-false-declines](https://www.clear.sale/blog/post/emv-domino-effect-cnp-chargebacks-false-declines)