Chip Cards Coming: EMV Compliance Deadline October 1st

Elite Merchant Solutions wants to update its clients about the EMV deadline coming up quickly on October 1st, 2015. In October, every merchant must be prepared to accept the next generation of plastic – with embedded smart chips – or be responsible for fraudulent card-present transactions that occur when customers are using chip cards.

The U.S. is moving to new chip cards based on a global standard called EMV, already in use in 2.37 billion payment cards worldwide, to enhance in-person payment security for consumers, merchants and issuers. EMV chip cards contain secure computer chips that validate the authenticity of the card and include a one-time use security code in every transaction, making chip payment data virtually impossible to use for counterfeit card fraud. Starting in October 2015, the payment brands will shift the responsibility for any fraud resulting from a payment transaction to the party using the least secure technology. Fraud liability shifts” for card issuers and merchants are meant to help synchronize the timelines to move all industry stakeholders to implement chip technology.

EMV technology is simple and cost effective, plus gives your business the latest Apple Pay, Samsung Pay, Google Wallet and CurrentC acceptance capabilities. Elite Merchant Solutions is fully EMV compliant and will make sure its clients will comply to the October 1st deadline.

EMV Liability: What Does the Liability Shift Mean?

October 1, 2015 is the effective date that the counterfeit, lost and stolen, and non-receipt fraud liability shifts from issuers to merchants.

  • The exception is Automated Fuel Dispensers that will remain as is until October 2017.

  • Merchants that do not incorporate EMV technology will assume financial responsibility for fraudulent transactions.

  • EMV is still required for In Store terminals.

Late adopters of EMV will be small and micro businesses.

  • Indications are that around 35% of small merchants do not understand what EMV means to their business.

  • Ninety percent of data breaches involve small/medium sized businesses.

The U.S. marketplace at the end of 2015

  • Of the 1.2 billion payment cards in circulation by years’ end, 756 million (63%) will be EMV enabled chip card.

  • More than 46% of retailers are projected to be EMV-capable.

Liability Implications of EMV

In U.S. today:

  • Fraud in card-present environments is absorbed by Bank/Issuer unless merchant fails to meet POS acceptance and dispute resolution requirements

  • Losses are offset when dispute resolution requirements allow liability to be shifted through “chargeback process” to Acquirer/Merchant

  • Merchant/Acquirer takes liability for merchant data breaches or skimming attacks

Fast forward – October 1, 2015 with EMV:

  • Counterfeit fraud losses “shift” to party who does not enable EMV if fraud would have been avoided if EMV had been used. Merchant must run as an EMV transaction.

  • Party that cannot support either online or offline PIN (if a chip card is PIN preferring) will hold the liability in the case of chargebacks resulting from lost or stolen card fraud

Equal capabilities = issuer holds liability