Everything You Need To Know About the EMV Liability Shift


Business owners, let’s get clear on what this shift means for you

The EMV Liability Shift has begun and if you aren’t clear on what it is or how it may affect you, you’re not alone. While the shift has been a hot topic, there has been a lot of information—and misinformation—released and many business owners aren’t sure exactly what they should expect. To help make things clearer, here’s an outline of the details of the EMV Liability Shift and what you need to know.

What is EMV?

EMV stands for Europay, MasterCard and Visa. At its essence, EMV is a secure method of payment that features smart chip technology. EMV is already in use around the world and has begun to replace much of the magnetic stripe technology that most of us are used to. The benefit of EMV is that it offers an elevated level of security because the smart chip technology is virtually impossible to clone. It also offers buyers the convenience of paying either with their mobile device, virtually or at the point of sale. Stolen cards cannot be used at an EMV terminal without the unique code generated by the chip, so it’s virtually impossible to make a fraudulent transaction.

What is the EMV Liability Shift?

Up until October 2015, liability for fraudulent transactions rested on the shoulders of the card issuers. This meant that when purchases were made at your place of business with a stolen card or card number, the bank, credit union or credit card company would be liable for those charges and you would not lose the proceeds from that transaction. But now, to encourage the use of EMV chip-enabled devices, that liability has shifted to merchants. The reason for this shift is the rise in fraudulent purchases using the old magnetic strip technology. As of 2010, the annual cost of card fraud was approximately $8.6 billion annually and the estimated number for this year is expected to be more than $10 billion.

How does this affect you?

As a business owner, you’ve probably had credit or debit card payments that did not go through. If the customer used their credit or debit card, however, the issuer would have been responsible for any fees associated with the fraudulent charge. You did not have the burden of trying to collect the payment or losing the money all together.


Now this still holds true if your business has adopted EMV technology; you would still be covered and not be liable. But if you haven’t made the switch to EMV and are still accepting magnetic strip payments, you leave yourself open to losses if and when a fraudulent charge is made. Here’s the reality of your liability as a business owner:


    • Merchants who use non-compliant EMV devices and accept transactions made with non-EMV compliant cards assume liability for any and all transactions that are found to be fraudulent.


  • Merchants who accept a magnetic stripe card that was counterfeited with track data copied from an EMV chip card that is subsequently swiped at a POS device/application that is non-EMV compliant may be liable for the chargeback resulting from the fraud.


This applies to purchases made with a variety of credit and debit cards including American Express, Discover, MasterCard, NYCE Payments Network, SHAZAM Network, STAR Network and Visa, among others. 


What merchants are encouraged to do

While there may be an initial expense in implementing EMV-compliant technology, the threat of losses caused by this new assumption of liability promises to be much greater. It’s important to note that many ATM machines across the United States have already changed over to EMV compliant technology.

Here are some other things to consider relating to EMV-technology

    • Visa is offering an incentive to merchants who make the conversion that will help pay for some of the costs associated with switching technology


    • The use of EMV compliant cards and devices increases the use of mobile payment methods


    • Across the world, there are 401 million EMV cards already in use and 5.6 million EMV terminals


    • In other countries, EMV-cards and terminals have helped reduce the amount of credit card fraud


  • Nearly all POS terminals sold today in the United States are EMV ready
For business owners, there’s no doubt that implementing the new EMV technology will not only protect you against losses associated with fraudulent charges from a stolen card, but also eliminate the possibility of your company being held liable. If you haven’t made the switch and are still accepting magnetic swipe cards at your point of sale or for online business, experts advise that you consider EMV terminals before you’re faced with a costly situation. For more information on this or any other business liability concerns, give us a call.