In 2015, Visa and American ExpressAn organization that issues cards and acquires transactions, unlike Visa and MasterCard, which are bank associations. initiated chargebackThe act of reversing a sale made by the merchant. This can happen for many reasons including procedural and fraud. The process usually begins with a dispute from the cardholder. policies designed to decrease fraud liability for merchants and acquirers during the EMV chip migration. The policy (which blocked all counterfeit fraud chargebacks of less than $25 and limited issuers to 10 chargebacks per account) was enacted in July 2016. The primary goal of the policy was to protect merchants who were waiting for their newly-installed EMV chip-readers to be certified.
Merchants and acquirers will lose this protection on April 18, 2018 and become responsible for all applicable counterfeit fraud associated with EMV chip transactions. The chargebackThe act of reversing a sale made by the merchant. This can happen for many reasons including procedural and fraud. The process usually begins with a dispute from the cardholder. amount will be collected from either the merchantA business that accepts credit cards for goods or services. or the acquirerAny bank, financial institution, and public or private company that maintains a seller’s credit card processing relationship and receives all transactions from the seller to be distributed to the credit card issuing banks., depending on who was most responsible for the lack of EMV compliance at the time the fraud was committed.
For example, if a business’s point of sale system is EMV compliant, but the merchantA business that accepts credit cards for goods or services. allows a counterfeit chip card to be swiped through a magnetic stripeA stripe on the back of a credit card that contains magnetically encoded cardholder information. The name of the cardholder is stored on Track I. The account number and expiration data are stored on Track II. reader rather than inserted into an EMV chip reader, the merchantA business that accepts credit cards for goods or services. will be held liable. If fraud occurs because an acquirerAny bank, financial institution, and public or private company that maintains a seller’s credit card processing relationship and receives all transactions from the seller to be distributed to the credit card issuing banks. fails to provide a merchantA business that accepts credit cards for goods or services. with EMV-compliant equipment, the acquirerAny bank, financial institution, and public or private company that maintains a seller’s credit card processing relationship and receives all transactions from the seller to be distributed to the credit card issuing banks. will be responsible for any fraud-related chargebacks.
When is the merchantA business that accepts credit cards for goods or services. responsible for a chargebackThe act of reversing a sale made by the merchant. This can happen for many reasons including procedural and fraud. The process usually begins with a dispute from the cardholder.?
Following April 18, chargebackThe act of reversing a sale made by the merchant. This can happen for many reasons including procedural and fraud. The process usually begins with a dispute from the cardholder. liability will most likely fall on the merchantA business that accepts credit cards for goods or services., but not always. The situation, card brand, and equipment involved can all play a part. The merchantA business that accepts credit cards for goods or services. is responsible in the following cases:
- A pin-based American ExpressAn organization that issues cards and acquires transactions, unlike Visa and MasterCard, which are bank associations., Discover, or Mastercard chip card is stolen and swiped at a store that isn’t EMV-ready.
- A chip card is swiped at a non-EMV compliant merchantA business that accepts credit cards for goods or services., the magnetic stripeA stripe on the back of a credit card that contains magnetically encoded cardholder information. The name of the cardholder is stored on Track I. The account number and expiration data are stored on Track II. (mag stripe) data is stolen, and fraud occurs.
- Stolen mag stripe data from a chip card is used to create a counterfeit chip card. The fake card is swiped at a non-EMV compliant merchantA business that accepts credit cards for goods or services..
There are other scenarios that affect liability, but if your store has the proper EMV equipment and certification, you can protect your business from chargebacks by ensuring that customers insert their chip cards instead of swiping them.
What if Customers Complain?
Some customers may grumble about the extra time chip readers add to a transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account..... They may even try to swipe their chip cards and say they’re doing it because they’re in a hurry. Merchants may want to politely explain that the extra time chip readers take is worth it because it protects merchants and customers alike from fraud. Most customers will understand. Alternatively, a customer pretending to be in a hurry in order to commit fraud won’t be as understanding. Don’t be surprised if that customer suddenly switches to another payment method or decides not to complete the purchase.
At National Merchants Association, part of our mission is helping merchants understand the latest developments in payment policies and regulations. We’re also a leader in merchantA business that accepts credit cards for goods or services. services, offering a proprietary chargebackThe act of reversing a sale made by the merchant. This can happen for many reasons including procedural and fraud. The process usually begins with a dispute from the cardholder. control platform that helps enrolled MIDs stay open up to 70% longer. To learn more, contact NMA today or call (866) 509-7199.
www.NationalMerchants.com