EMV Liability Shift – Three Years Later

Three years ago today, major credit card companies issued a new security standard requiring business owners to accept EMV chip credit cards at their establishments. The October 2015 EMV liability announcement was not a mandate to upgrade equipment, but a transition of fraud liability from the credit card companies to the merchants who had yet to make the change to chip technology. Effectively, this meant that any business owner who accepted transactions without the use of EMV technology would be responsible for any financial loss due to subsequent fraudulent charges.

The name EMV comes from the three credit card issuers that founded this standard: Europay, Mastercard and Visa. Invented in Europe almost 25 years ago, EMV chip cards are intended to ensure secure transactions. The embedded microchip turns the cardholder’s personal information into a unique code when processed at an EMV terminal, making it difficult to duplicate. In contrast, previously customary magnetic-stripe cards store data statically, making it easy for fraudsters to duplicate the data and create counterfeit cards.

While EMV has seen significant growth in the United States following the liability shift, the U.S. is still far behind Europe in terms of adoption. Almost three years later, USA Today reports that nearly one-third of small retailers do not use EMV chip-reading credit and debit card machines, despite considerably lower fraud rates.

Why haven’t these small business owners made the switch? Many cite time and money. It requires new hardware, technology and employee training. Additionally, retailers complain that the chip cards take much longer to process and often delay customer check-out.

“Retailers that haven’t adopted the new anti-fraud technology blame the delays on the cost of upgrading charge card systems and delays in obtaining certification for the machines,” reported USA Today’s Shelby Le Duc.

Conversely, the risks associated with this decision could lead to debilitating problems and even higher costs. Business owners who don’t use card chip terminals are allowing their customers’ cardholder data to be vulnerable to fraudsters. At the same time, these merchants are subjecting themselves to the potentially astronomic fraudulent charges associated with the regulation.

These risks related to fraud-prone magnetic stripe cards are only growing. Just six months after the Liability Shift, an April 2016 study reported a 31 percent increase in the number of chargebacks. Aaron Press, payments director at LexisNexis Risk Solutions attributed the jump to fraudsters shifting their targets to brick and mortar stores that had yet to make the switch to EMV terminals.

In 2018 it is estimated that merchants will miss out on $118 billion due to unwarranted chargebacks. One way to mitigate the effect of true fraud chargebacks is to have the proper security in place at the point of transaction. To protect both merchants and consumers in the United States, it deems essential that business owners who have yet to update their systems re-evaluate the substantial benefits that come from making the shift to EMV terminals.

With Beyond, businesses are offered secure transactions, equipped with EMV, fraud protection and prevention. Learn more about Beyond’s industry-leading payment technology and business services.


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