UPDATE - The EMV Liability Shift: Where is It in 2016?

EMV liability was a hot topic last year in 2015. Multiple plans have been rolling out since and the October deadline has come and gone. Now, chipped cards are being introduced worldwide with the USA being one of the later holdouts on the new technology. The question asks us, where do we all fall now on this whole liability issue?

As the EMV liability regulations take hold, it is more important than ever that the actual chips in your cards are made with the utmost quality and the highest standards of engineering. The last thing you want is for your company to become liable for mistakes that could had been easily avoidable by setting down some protocols such as ordering your chipped cards from a quality source.

First, let’s talk a little bit about what these regulations are just in case you have not been keeping up to date on the issues in this sector of the payment industry.

As chipped cards have become more secure than their magnetic strip counterparts, regulatory bodies are changing policy to reflect this and to promote the usage of chipped cards over the magnetic strip. This is being done because it can help limit fraudulent activities.  Before October 2015, if the card was present during a fraudulent transaction that transaction would fall onto the card issuer company as the bearer of the liability. Now, with chipped cards becoming the norm, a card-present fraudulent situation will be falling on the actual merchant, though only in certain cases. Those certain cases will be when there is fraudulent activity on a card that has no EMV chip-enabled device on it.

Fallback transactions have their own special spot here in the EMV liability shifts. If you are unfamiliar with what fallback transactions are, they are when for some reason the chip of the card doesn’t work. Therefore the credit card has to “fall back” to the traditional magnetic strip on the card. Some fraudsters will damage their chip on purpose with their counterfeit cards to “force” the situation on the merchant to do the fallback transaction. However, if the merchant sends the right indicators that the transaction is indeed a fallback, then the liability shifts back to the issuer not the merchant. Since the payment processor industry now considers these kind of transactions to be risky endeavors, it is left up to them what to do with the transaction. Often, the issuers will not authorize these kind of payments anymore because of the risk.

Fortunately, this happens very rarely.

If it does start happening more frequently, the liability might shift back onto the merchant. If a company is seeing 2% fallback transactions, that is indicative of a big, looming problem that needs to be fixed. Typically, these problems arise from payment processing equipment that has not been properly configured. Sometimes it can arise from procedural issues though, in either case it is up to the merchant to fix these issues before accepting any more payments through their processor.

In Conclusion

As you can see, the EMV is pushing more and more for chip-capable cards. The technology is there, and the technology makes the end user (the actual card holder) much safer from fraudulent activity than the traditional magnetic stripe. That being said, the shifts in liability are important to follow to make sure you as a card issuer or a merchant that accepts payments are aware of what you are responsible for. 

Ultimately, you will be able to circumvent most issues by just doing some simple quality control by going with a provider that sources the highest quality chipped cards on the marketplace today. 

That is exactly where we come in. We provide world leading solutions for chipped cards, whether it is bank cards, ATM cards or another application that you are looking to fulfill for your business. Here at Cardzgroup, we have successfully partnered with China’s two biggest secure card plants. That is how we are able to collaborate with Visa &Mastercard when it comes to managing the entirety of the bank card orders process. As you might imagine, this makes our customers feel at ease knowing that they are going to get exactly what they need and that they are going to get world class quality that will help mitigate liability risks that could fall back on the issuer. 

In this new era of chipped card technology, Cardzgroup has become recognizeed by Visa &Mastercard when it comes to handling the process for secure bank cards from start to finish.

Are you looking for a new supplier for your company’s bank cards? If so, click here to check out our secure bank cards and chip technology.

As our industries continue to change and the payment processing world evolves, liabilities might shift again or new ones may form. Keep this blog bookmarked, as we will keep you up to date on what is transpiring in the industry and most importantly… what you need to watch out for to make sure your company is as protected as possible from the EMV liability shift.


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