The Nightmare Continues: Banks Using New Payment Standards To Soak Retailers

by Sarah Grotta 0

The percentage of retailers who are up and running with EMV terminals and requiring cardholders to insert their chip cards is still in dispute. The article in Forbes reports on a statistic that is lower than most reported in the industry:

According to a piece published this morning by Greg Buzek, President of IHL Services, only 8.5% of merchants are able to accept the new cards, which he describes as “EMV ready.” At last count, less than 40% of consumer debit and credit cards contained the necessary chip in any case.

Regardless of the percentage, financial institutions that have issued EMV cards with EMV chip cards are carefully reviewing their chargeback transactions now that the liability shift has given them the opportunity to push back losses onto merchants who have not migrated their terminals. This article contends that financial institutions are taking their new found fraud avoidance option to far, and are returning all chargeback types to non-EMV merchants, including fraud categories that are not included in the liability shift:

When banks sent retailers that were not EMV compliant the bills for fraudulent transactions as promised, they sent every single chargeback…even the ones the guidelines say the retailers were not liable for! Lost and stolen cards are not supposed to be charged to the retailers for fraudulent transactions. So for instance, if I stole your chip card and went to store and used…that is a legitimate card, but I’m not a legitimate user. EMV as implemented as chip and signature would not catch me doing if you had not reported it lost or stolen yet… all of these charges are being passed on to the retailers.”

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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