By: Hannah Walker, Senior Director, Technology and Nutrition Policy, Food Marketing Institute
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Financial fraud is nothing new, especially in the United States. According to The Nilson Report, while United States accounted for almost 24 percent of total global purchase volume in 2016, it bore over 39 percent of global fraud.  In dollar terms, the U.S. economy shouldered $9 billion of the $22.8 billion of global card fraud.  This drag on our economy hurts U.S. customers, businesses and makes us less competitive globally.   Rightfully so, there is a shared frustration amongst FMI member payments professionals, asset protection and loss prevention experts, CIOs, CFOs and even CEOs regarding the lack of ability to truly tackle payment card fraud head-on using the strongest and most innovative technology.

Here is what we do know; on its current trajectory U.S. payment fraud is expected to reach a whopping $14.41 billion by 2025, and as a country we are lagging behind our competitors. American consumers, retailers, financial institutions and our economy all deserve better. With that in mind, the Food Marketing Institute (FMI) was joined by other retail trade associations, debit processing networks and individual retailers to launch the Secure Payments Partnership (SPP), designed to advance sound policies that drive state-of-the-art technologies, competition, and collaboration to ensure the U.S. payments system becomes the global gold standard. 

The status quo is not working, and we must do better, which is why the Partnership launched with four policy “pillars”:

1) Strong User Authentication: 

Whether the transaction happens in store, in app, or online, retailers must be able to utilize the strongest tools to authenticate that the person presenting the card is actually authorized to use it. While FMI members are fully PIN-enabled in store today, we want to drive sound policy to ensure whatever technologies are used in the future can be fully utilized by retailers.

2) Payment Security Innovation:

The U.S. must foster true innovation and competition to drive advancements in security. Developing technologies and innovation present significant opportunities to prevent fraud and protect consumers.  

3) Open Security Standards:

The current legacy standard setting bodies are closed, and do not include all, or even many, of the various stakeholders in the payments ecosystem.  We must move beyond only having one industry set standards for all stakeholders and create an open and inclusive standards setting body.

4) Network Routing Competition:

All debit cards in the United States have at least two competing networks enabled on the card capable of processing payments. Not only does this competition drive innovation and keep costs down, it also provides essential redundancy to ensure the continuity of commerce if one network suffers an outage. Just last week, Visa suffered an outage across several countries in Europe. During the prolonged outage many customers were left with no ability to pay for goods and services, and retailers with many lost transactions. At one point Mastercard was able to stand in and process some of the transactions, further proving that not only is it possible for alternative networks to process credit cards, but there is a need to have them enabled on all cards.

With the launch of the SPP, the real work begins. The SPP is committed to engaging with all stakeholders to find real solutions utilizing the strongest and most state-of-the-art technologies to tackle fraud head on. As a founding member of the SPP, FMI will continue to engage with our retail members to leverage their insights and expertise as we develop and advocate for strong policies to strengthen our payments system. Learn more about the SPP here: