9 Tips on EMV Fraud Liability Shift for Merchants

Jun 25, 2018

The nationwide adoption of EMV chip cards and processing technology brought a major change in the US. This was something different from what people used to have – mag stripe cards. Are you a merchant interested in EMB fraud liability in the US? Just keep on reading this article and you’ll learn more about it.

EMV Liability Shift in the US

EMV was implemented in the US a few years ago. As in other countries, the goal was to reduce card-present fraud in the US. For POS (Point of Sale) transactions, the majority of US payment networks implemented EMV fraud liability shifts in October 2015.

Some networks implemented or announced liability shifts for ATMs and/or automated fuel dispensers (AFDs) as well. The AFD or automatic fuel dispenser was an exception. Its fraud liability start date was set for October 2017.

October 2015 was applicable across all global payment networks. American Express and Discover, as well as MasterCard and Visa were among them. The fraud liability shifts for ATMs came into effect in October 2016 for MasterCard. When it comes to the other payment networks, the fraud liability shifts took effect from October 2017.

Let’s take Visa chip cards. They protect in-store payments through the generation of a unique, one-time code. The latter is required for the approval of transactions. Thanks to this feature, it becomes virtually impossible to counterfeit cards. As a result, in-store fraud is being eliminated.

With all this in mind, you, as a merchant, should take the right steps to protect your business from payment processing fraud. Working with a reputable payment processor like eMerchantBroker.com, you can enjoy the best security and protection for your online business. EMB, #1 high risk credit card processing company in the US, can help you with EMV fraud liability and provide unmatched chargeback protection in the industry.

The counterfeit card liability shift refers only to transactions where the user presents a counterfeit magnetic stripe to a POS terminal that doesn’t support (at a minimum) contact chip EMV. Let’s move forward and find out more details concerning the EMV fraud liability for merchants.

EMV Fraud Liability for Merchants

Here are important tips on EMV fraud liability for merchants:

  1. The US is the only country where counterfeit card fraud is increasing on a consistent basis. The shift aimed to encourage faster adoption of EMV payment technology.
  2. The liability shift is focused on incentivizing chip protection. Merchants get liability protected once they get a terminal and start accepting chip cards. This is just vice versa for issuers.
  3. What about a chip card being used at a traditional magnetic stripe-only terminal? If the purchase is a counterfeit transaction, the merchant will be held liability. The reason is that the issuer has made the investment in chip technology for the purpose of making transactions more secure, while the merchant didn’t invest in upgrading to chip.
  4. What about a chip card being used at a chip-enabled terminal activated by the merchant? If the purchase is a counterfeit transaction, the merchant won’t be held liable. The issuer will still be responsible for counterfeit fraudulent activities.
  5. The EMV liability shift doesn’t refer to card-not-present (CNP) transactions, as well as lost and stolen fraud. In these cases, you deal with the existing liability and chargeback rules.
  6. What about a magnetic stripe card being used at a magnetic stripe terminal? The issuer will be held liable for fraud.
  7. If a Mastercard, American Express or Discover Card is used to commit fraud, the issuer will be held liable for chargebacks, unless the card is a PIN credit/debit one, and the accepting merchant wasn’t able to process the card as a chip card and had to swipe the mag stripe instead.
  8. Even if your most payments are completed online, you’ll still be held liable for the in-store payments, unless you own a gas station.
  9. Merchants who aren’t ready yet, shouldn’t worry. October 1, 2015 was the official date of the liability shift, which will be applicable if fraud occurs. However, in case you haven’t made the transition to EMV yet, choose the right time for you and do it.

The EMV liability shift is called to protect the entity offering an added layer of security. Also, it holds the other entity offering less secure systems responsible for payment fraud.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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