Now that the EMV liability shift has passed, many merchants who still have not adopted EMV technology have complained about experiencing an increase of chargebacks for their business. The reason for these significant increases of chargebacks is still unclear.
One network reported that out of 250,000 merchants, there was an increase of card-present chargebacks by 50%. Some experts believe consumers are abusing the chargeback system, while credit card companies feel this increase is common and comparable to what other countries experienced with the emergence of EMV.
Because of this increase, some merchants have begun to sue issuers and networks, declaring they did not have enough time to integrate EMV solutions and were not cautioned of the costly fines involved. On the other hand, card companies maintain the stance that merchants have had five years to make the switch to EMV capable products and should have complied by the liability shift.
However, some merchants who met the liability shift and upgraded their terminals are continuing to face delays from processors that are still not EMV-ready. This delay of EMV software could be caused by stricter EMV installation guidelines recently issued by VISA and also in part due to a lack of technical expertise from the merchant.
As the payments industry continues to sort out the EMV issues, merchants can avoid the possibility of chargebacks by understanding the regulations of EMV. Here are some key facts merchants should recognize:
- Merchants should not be held accountable for chargebacks that occur on valid, non-fraudulant cards not containing a chip.
- Merchants who lack EMV-capable terminals are now at a higher risk for instances of fraud, as criminals are avoiding merchants that have EMV since these terminals are harder to compromise due to heightened security features.
Merchants are held liable once a card is swiped. If there is a dispute or fraud involved, the merchant will be held responsible for losses, not the bank.
The most efficient way to avoid EMV chargebacks can be done by processing transactions correctly. Be sure to follow these rules:
- Always swipe non-chip cards and never manually enter in the account numbers.
- If you have to manually enter in card numbers, use the security code, notice the expiration date and take an imprint, if possible.
- Be sure to look out for fraudulent cards.
- Do not key or swipe in a chip card. This offers zero protection.
- Ask for a signature and be sure to verify.
- Process chip cards correctly by inserting them within the terminal and following the instructions properly.
- Do not override or swipe a declined chip card. Instead, ask for a different form of payment.
Although chargebacks have been an issue within the payments industry for decades, the start of EMV technology has increased this problem for merchants. Thankfully, merchants can lessen their chances of experiencing a chargeback by adopting EMV technology solutions and following the regulations to process a proper transaction.