So, what’s the deal with chip cards?
An overdue upgrade
In October of 2015, the US finally decided to join Europe and the rest of the world by upgrading from existing credit card swipe technology (the same “technology” as cassette tapes). Chip Cards are also known as EMV which stands for Europay, Mastercard and Visa. EMV is the global standard for credit cards equipped with security chips and the technology used to authenticate chip-card transactions. The rollout in the US has been anything but smooth, with some large retailers still swiping your chip cards more than 2 years later.
Shifting liabilities
The biggest change in October 2015 was the “Liability Shift”. Since that shift, merchants have been liable for all fraudulent transactions that don’t utilize EMV technology. Even with a signed receipt or video evidence, the merchant is still responsible! If a customer disputes a charge and files a “chargeback” with their credit card company, the merchant will automatically lose the dispute if they are not utilizing EMV readers. The merchant will not be paid for their product or service and will additionally be liable for any processing fees including additional chargeback fees.
Not accepting chip cards is a magnet for fraud
Now that we are two years past the liability shift, savvy criminals and grifters know that they can take advantage of this system. Restaurants and retail shops are particularly vulnerable to these crimes. Con artists are aware they can purchase (often very expensive) items, meals and services, then dispute the charges with nearly no consequences. The only recourse available to merchants is through the legal system, which can end up costing more than the fraudulent transaction.
Many solutions are still not EMV ready
Have you noticed a large grocery chain or big box store not yet accepting EMV? It could be because they have a combination of point-of-sale (POS) systems, processors and other technology (#paymentstacks) that still haven’t completed the EMV upgrade. Moreover, many simple solutions like mobile card swipers don’t offer a chip reader and are waiting to be EMV ready. Even if they do have the technology, the extra time it takes for a chip card transaction adds a significant cost by slowing down the checkout process.