EMV For Merchants

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Read more on accepting EMV chip cards...  

The information is based on current information and regulations, cards schemes continually update regulations and while we try to keep this web page update often, please email us with specific questions oadditional information is received.

What is EMV?

  • EMV (Euro MasterCard Visa) is a chip card standard being rolled out to eventually replace legacy mag-stripe card technology.  Much of the rest of the world switched to chip and PIN cards years ago. 
  • EMV is being implemented in an attempt to prevent card skimming and counterfeit mag-stripe card use for card-present transactions.   Versions of EMV verifications methods at the POS include: Online PIN, Offline PIN, Signature and No Card Verification. 
  • EMV chip cards will not require system changes at card-not-present (MOTO, ecommerce, invoice billing, recurring payments, etc.) merchant types.
  • EMV has no impact on PCI compliance requirements for small and midsized merchants or choice of self-assessment questionnaire (SAQ).

EMV Cards and Terminals

  • EMV roll out involves card issuing banks re-issuing cards with an EMV chip.  EMV cards with a chip will continue to have a mag-stripe and merchants will still be able to accept cards swiping the mag-stripe. 
  • Projections vary but according to Visa, 17% of the U.S. face-to-face card-accepting merchant base are now enabled to accept EMV chip cards as of January 2016.  Visa expects 50% of locations to be EMV enabled by the end of 2016.
  • EMV chip card acceptance at the POS will require a card reader to ‘read’ the chip.  Vantage recommends opting for dual-interface chip readers that accommodate contact and contactless payments, and it is a requirement for merchants in order to take advantage of EMV incentives.  In fact, effective April 2017, MasterCard will extend the fraud liability shift to include contactless transactions.  

Is there an EMV Terminal Mandate?

  • No.  It is important to understand the EMV rollout in the U.S. is not a law, it is not an issue of “your terminal is out of compliance” and it is not a “mandate” or a requirement.   However there are new chargeback rule changes designed to encourage merchants to upgrade their payment technology to accept chip cards.

The EMV Liability Shift

  • EMV processing will introduce new rules governing card present fraud chargebacks designed as an incentive for both card issuers and merchants to adopt EMV cards and terminals.  Set to take effect on October 1, 2015 and commonly known as the EMV liability shift, the new rule will determine where liability lies if fraud occurs.  While card issuers currently have to bear the costs of counterfeit credit cards, this new rule will now shift that responsibility onto the merchants in certain circumstances. When the rule goes into effect, counterfeit (skimmed, cloned cards) and lost or stolen transaction liability is shifting to merchants without EMV capable hardware and software.  Additionally, card issuers have the ability to select their "preferred" cardholder verification method (CVM) and if the merchant's POS does not support the issuers preferred CVM and fraud occurs, the merchant will be liable for the chargeback. At present, most U.S. issuers are opting for chip and signature over chip and PIN as the cardholder verification method.

    The number of chip card fraud/counterfiet chargebacks is increasing.  Here are specific chargeback reason codes to be aware of.

    Visa Reason Code 62 – Counterfeit Transaction

    This reason code is specifically for counterfeit fraud, EMV disputes.  If the cardholder presents an EMV card, and the merchant does not have an EMV capable device/application, the merchant will be liable for a chargeback.

    If the merchant has an EMV capable device/application and the transaction was processed with/as EMV correctly, the merchant will be protected from accepting chargeback liability. 

    Merchant is responsible for responding to the Retrieval and/or Chargeback notice within the specified time frame.

    MasterCard Reason Code 4870 and 4871 – Chip Liability Shift

    This reason code is specifically for counterfeit fraud, EMV disputes.  If the cardholder presents an EMV card, and the merchant does not have an EMV capable device/application, the merchant will be liable for a chargeback.

    If the merchant has an EMV capable device/application and the transaction was processed with/as EMV correctly, the merchant will be protected from accepting chargeback liability. 

    Merchant is responsible for responding to the Retrieval and/or Chargeback notice within the specified time frame.

    Discover Reason Code UA05 & UA06 – Fraud – Chip Card Counterfeit Transaction  

    If the cardholder presents an EMV card, and the merchant does not have an EMV capable device/application, the merchant will be liable for a chargeback.

    If the merchant has an EMV capable device/application and the transaction was processed with/as EMV correctly, the merchant will be protected from accepting chargeback liability. 

    Merchant is responsible for responding to the Retrieval and/or Chargeback notice within the specified time frame.

    American Express Code F30 - Transfer Counterfeit Liability

    This reason code is specifically for transferring counterfeit liability to the acquirer for transactions conducted with a Chip card at a device that is unable to process Chip transactions. If the cardholder presents an EMV card, and the merchant does not have an EMV capable device/application, the merchant will be liable for a chargeback.

    If the merchant has an EMV capable device/application and the transaction was processed with/as EMV correctly, the merchant will be protected from accepting chargeback liability. 

    Merchant is responsible for responding to the Retrieval and/or Chargeback notice within the specified time frame.

    American Express Code F31 – Transfer Fraud Liability

    This reason code is specifically for transferring lost/stolen/non-received fraud liability to the acquirer for transactions conducted with a Chip and Pin Card at a device that is unable to process Chip and Pin transactions. If the cardholder presents an EMV card with PIN, and the merchant does not have an EMV capable device/application, the merchant will be liable for a chargeback.

    If the merchant has an EMV capable device/application and the transaction was processed with/as EMV with PIN correctly, the merchant will be protected from accepting chargeback liability. 

    Merchant is responsible for responding to the Retrieval and/or Chargeback notice within the specified time frame.

  • When the liability shift rule goes into effect, merchants most concerned with counterfeit card use at their location and those with large ticket items would have the greatest business case to upgrade. 

Addional EMV Considerations

  • Merchant staff training on new EMV procedures at the POS will be an important part of the implementation.  It is anticipated that there will be some customer confusion and staff assistance required to help customers navigate the new EMV checkout process.  The user interface of the terminal POS will also change (enter dollar amount first vs. swipe then enter dollar amount) so additional clerk training will be needed. 
  • For merchants that currently accept tips, another big change is that with EMV transactions the inserted chip card will stay in the terminal until both base amount and tip amount have been entered and the transaction is complete.  This feature will reduce problems with prepaid and gift cards where limited balances create a challenge with tip adjust after an approved base sale amount and for chargeback issues around excessive tip adjustments.   This may also mean for some restaurants that changing from a pay at the table model to a central counter pay model will work best and be less costly than outfitting every server with EMV mobile terminals.  Read more about EMV transactions and the new checkout experience.

Additional Upgrade Benefits

  • Installing dual-interface chip readers that accept EMV and contactless cards is a direct path to achieving mobile NFC payment acceptance capability from mobile wallet payment apps from Apple, Android, Samsung and others.  Contactless payments enable merchants to offer rapid checkout, a “perk” that’s in increasingly high demand among busy consumers.