WHAT IS THE EMV FINANCIAL LIABILITY SHIFT?
Beginning October 1, 2015, financial liability for counterfeit point-of-sale (POS) payment card transactions will shift to, “the party that is the cause of a chip transaction not occurring….”1 Essentially, if the financial institution that issued a consumer’s credit or debit card issues EMV chip cards, and the merchant’s credit card processor can process them, then the merchant will assume financial liability for those fraudulent Visa, MasterCard, American Express and Discover POS transactions for which all the following conditions apply:
- the payment card was physically presented at the location where the transaction was processed in a card-present, face-to-face environment;
- the merchant did not use an EMV-enabled POS system or terminal to process the transaction; and
- the transaction resulted in counterfeit fraud, meaning that a fraudulent card had been presented for payment.1
HOW CAN MERCHANTS AVOID LIABILITY FOR COUNTERFEIT POS PAYMENTS FRAUD?
To avoid financial liability for counterfeit transactions, merchants are encouraged to upgrade POS equipment and systems to provide EMV enhanced authentication features that validate payment cards.2 Merchants using third-party POS services should ensure their providers will be certified as EMV compliant.
CONSUMER PROTECTION IS THE KEY
Consumers, naturally, are concerned about the safety of their card payment transactions, given recent public scrutiny of data security breaches, even though the Federal Reserve reports that credit card fraud is but a fraction of 1% of all purchases.3 As of May, 2014, 63% of consumers wanted “the enhanced security of a chip card as soon as possible.”4
An estimated “70% of all U.S. credit cards, and about 41% of debit cards — 1.1 billion cards in total — will be EMV-enabled by the end of 2015.”5 Market leaders are addressing consumer demand for POS payments data security by upgrading to EMV now and letting their customers know what they are doing to deserve the trust placed in them to protect their customers’ interests. “Most top tier retailers already have EMV in place,” says Verifone CEO Paul Gallant. “It’s really about turning on the system as opposed to putting in terminals.”6 More than “70% of terminals are projected to be EMV equipped prior to the liability shift….”7
Are you ready?
1 Visa U.S. Merchant EMV Chip Acceptance Readiness Guide, © 2014 Visa. All Rights Reserved. VBS 17.JUL.14: http://usa.visa.com/merchants/grow-your-business/payment-technologies/credit-card-chip/docs/Visa_US_Merchant_EMV_Chip_Acceptance_Readiness_Guide_10_Steps.pdf
3 Card Hub Statistic: http://www.cardhub.com/edu/credit-debit-card-fraud-statistics/
4MasterCard: Chip Card Consumer Attitudes, April, 2014: http://arm.mastercard.com/wp-content/uploads/2014/12/Final-_consumer_attitudes_May-2014-2.pdf
5 Computerworld: Most U.S. credit cards will have microchips by end of 2015: http://www.computerworld.com/article/2490592/security0/most-u-s–credit-cards-will-have-microchips-by-end-of-2015.html
6 Retail POS prepares for EMV, NFC & Apple Pay: http://mainstreetinc.net/retail-pos-prepares-emv-nfc-apple-pay/
7 MasterCard Advisors: U. S. Insights: http://www.mastercardadvisors.com