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emv compliance



What Happens if my Business isn't EMV Compliant?

There’s been a lot of buzz in the payment processing space about EMV. An acronym for EuroPay, MasterCard and Visa, EMV technology consists of credit cards with embedded microchips that contain the sensitive cardholder data needed to perform transactions, as well as the terminals that read and transmit the microchip data. EMV technology is inherently more secure than other payment processing technologies, and has been shown to significantly reduce card present fraud in the countries where it is in use. Already widely adopted in Europe, EMV is beginning to make headway in the U.S., mostly due to the fraud chargeback liability shift the card brands implements on October 1, 2015.

This chargeback liability shift is intended to encourage EMV adoption among U.S. merchants. With this liability shift, merchants not using EMV chip card technology to process chip cards may be liable for certain fraud-related chargebacks that could have been prevented by EMV. As time goes on and more consumers begin using this more secure payment option, merchants will be even greater pressed to become EMV compliant. According to Fortune, 70 percent of the 1.2 billion credit and debit cards in circulation in the U.S. will have EMV chips by the end of 2015.(1)

What EMV means for your business 
For many merchants, EMV acceptance has only added to the complexities of secure payment processing technologies. Some sources claim that merchants must implement EMV-enabled payment terminals as soon as possible, while others advise a wait and see approach. The fact is that the liability shift means different things to different businesses.

The chargeback liability shift has made assigning “fault” in fraudulent transactions a lot more complicated. Following are some U.S. liability scenarios that can serve as a guide to determining your liability for Visa, Discover, and MasterCard transactions (for Amex transactions, merchants need to contact their American Express relationship manager).

(Note that the term, “Fallback transaction” refers to a situation in which a normal chip transaction cannot be completed at a chip-capable terminal due to a malfunction with the chip-reading device or terminal, and the transaction is completed using magnetic stripe or key entered. Fallback transactions must be authorized online and properly identified as fallback. The issuer assumes liability for properly formatted fallback transactions, approved by the issuer.)  

Visa transactions:

IfIssuerhas...

andMerchanthas…

Thenthisparty holdstheliability

Forthisfraudtype

Chipcardw/PIN

ChipTerminalwithPIN-pad

Issuer

Counterfeit

Chipcardw/PIN

ChipTerminalwithnoPIN-pad

Issuer

Counterfeit

Chipcardw/PIN

Non-ChipTerminal

Merchant

Counterfeit

Chipcardw/PIN

ChipTerminal

Issuer

FallbackTransaction

Chipcardw/SIG

ChipTerminalwithPIN-pad

Issuer

Counterfeit

Chipcardw/SIG

ChipTerminalwithnoPIN-pad

Issuer

Counterfeit

Chipcardw/SIG

Non-ChipTerminal

Merchant

Counterfeit

Chipcardw/SIG

ChipTerminal

Issuer

FallbackTransaction

Discover and MasterCard transactions:

IfIssuerhas...

andMerchanthas…

Thenthisparty holdstheliability

Forthisfraudtype

Chipcardw/PIN

ChipTerminalwithPIN-pad

Issuer

LostorStolen

Chipcardw/PIN

ChipTerminalwithnoPIN-pad

Merchant

LostorStolen

Chipcardw/PIN

Non-ChipTerminal

Issuer

LostorStolen

Chipcardw/PIN

ChipTerminal

Issuer

FallbackTransaction

Chipcardw/SIG

ChipTerminalwithPIN-pad

Issuer

LostorStolen

Chipcardw/SIG

ChipTerminalwithnoPIN-pad

Issuer

LostorStolen

Chipcardw/SIG

Non-ChipTerminal

Issuer

LostorStolen

Chipcardw/SIG

ChipTerminal

Issuer

FallbackTransaction

Chipcardw/PIN

ChipTerminalwithPIN-pad

Issuer

Counterfeit

Chipcardw/PIN

ChipTerminalwithnoPIN-pad

Merchant

Counterfeit

Chipcardw/PIN

Non-ChipTerminal

Merchant

Counterfeit

Chipcardw/PIN

ChipTerminal

Issuer

FallbackTransaction

Chipcardw/SIG

ChipTerminalwithPIN-pad

Issuer

Counterfeit

Chipcardw/SIG

ChipTerminalwithnoPIN-pad

Issuer

Counterfeit

Chipcardw/SIG

Non-ChipTerminal

Merchant

Counterfeit

Chipcardw/SIG

ChipTerminal

Issuer

FallbackTransaction

As EMV chip cards becomes the global standard for credit and debit card payments, merchants are well advised to adopt the required credit card processing technology. To determine the best path and timing for adopting EMV at your business, consult with your trusted POS vendor.

  1. http://fortune.com/2015/07/22/mastercard-security-chip-pin-emv/

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