6 Crucial Things Merchants Need To Understand About The EMV Liability Shift

in Blog
on Wednesday, 02 March 2016 19:19

Whether you’re a merchant or your company focuses on serving merchants, you need to fully understand the rationale behind EMV terminals and the EMV liability shift in the United States. Now that the changeover has moved from being theory to a fact of life for most businesses, we’ve found there’s still a lot of misunderstanding about EMV-enabled device usage and issues. Perhaps we can clear some of it up for you.

Here are six crucial things merchants need to know about the EMV liability shift involving chip-in-card technology in the United States:

1. The shift to EMV technology is intended to shift liability for chargeback fraud. Beginning October 1, 2015, chargeback fraud liability rests with the financial institution unless the merchant involved in a transaction has not made the changeover to accepting EMV cards. To prevent being liable, merchants needs EMV compliant terminals. Credit card issuers were usually responsible before.

2. Liability for stolen EMV chip cards depends on the network. Issuers are usually responsible for fraud from stolen cards -- just as it always has been. If a card used for fraud was issued by MasterCard, American Express or Discover, liability remains with the issuer unless it is a PIN card with a chip that the merchant was unable to process correctly and had to swipe. Cardholders are not liable if they’ve tried to protect their cards and reported the theft.

3. The EMV liability shift doesn’t apply when the card isn’t present. That means online sales are not impacted by chip-and-PIN technology or the EMV liability shift. Fraud involving online transactions is handled just as it always has been.

4. Gas stations and ATMs are a temporary exception to EMV requirements. These locations don’t have to worry about the shift in liability until October 1, 2017. All other bricks-and-mortar locations must have EMV solutions in place and be able to deal with chip-in-card technology to prevent liability, even if they process only a few payments a week or use a mobile device to accept credit or debit cards.

5. Partial transition leaves merchants partially liable. Many businesses weren’t ready for the EMV transition when it happened, and many card issuers still haven’t completed issuing EMV cards yet. As a merchant becomes more compliant, however, the liability gradually shifts away. A partial transition is better than none at all.

6. The changeover isn’t exactly mandatory for merchants. Merchants that experience a very low rate of chargebacks -- like small restaurants or coffee shops and other small local stores -- may choose to hold off until equipment needs replacing. The consequences for not changing over may be few if a business doesn’t have many chargebacks. But all businesses need to eventually make the transition.

PayVisors helps companies make good decisions. Whether you’re a merchant dealing with the EMV transition or a company that serves merchants, we can help smooth the road toward complete EMV compliance. Why not contact us now to learn more about what we can do for you?

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