Merchant’s Guide to the EMV Fraud Liability Shift

Tuesday, June 5th, 2018

For years, there have been discussions of a ‘chipped’ card that heightens the security for merchants as well as cardholders. These cards are now in circulation. In fact, EMV-readiness deadline for brick-and-mortar retailers was long gone— Oct. 1, 2015.

But that’s no reason to fret if you’ve haven’t updated and understood what the ‘Fraud Liability Shift’ that come with these cards entail. This blog breaks down the whole thing for you by answering all your questions:

1-Why is EMV-readiness linked to better security?

The magnetic stripes used in designing conventional credit and debit cards store unchanging data. Fraudsters know this and use it as a weak-point to access this sensitive cardholder info which they can use for illegal purchases. In other words, counterfeits target magnetic stripe cards.

On the other hand, each time you run an EMV card transaction this new-age card chip generates a unique transaction code which can never be used again. In a nutshell, EMV-readiness won’t put a stop to data breaches, but it will make it almost impossible for scammers to profit from the data they steal.

2-What’s the EMV liability shift?

Beginning Oct. 1, 2015, every time a retailer runs a magnetic stripe card transaction that was counterfeited with info copied from an EMV chip card, and the swiping goes down at a POS device that’s not EMV-ready, and the transaction is successful then the retailer will be liable for the chargeback leading to the fraud.

3-Am I required by law to be EMV-ready?

No, there’s no law pushing any business to shift to the chipped cards.  Nevertheless, stores that take credit cards (in person) but can’t accept ENV cards put their companies at risk for incurring extra fraud-related expenses.

Card not present or CNP merchants always suffer higher liability because it is nearly not possible to confirm who’s using the card.

4-What if I don’t upgrade equipment, will I still be able to take credit cards?

Sure— all EMV cards will have the still have a magnetic stripe and are compatible with today’s processing equipment.

5-How are fraudulent transactions handled since the EMV liability shift?

In the past, the issuer backed the creditworthiness of the card, and the account issuer would reimburse the merchant in case of the counterfeit transaction.

But since the liability shift, the acquirer, issue and payment processor are all EMV-ready system, and so your business is the only weak-point. And for failing to update to the latest tech and thereby giving criminals a chance, you become accountable for the fraudulent cost.


EMV-readiness, like chargeback insurance is a good way to protect your business from online fraud.

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