Verifone MX925 user Manual
Credit Card Processing and EMV FAQ » updated May 24, 2016
What is this credit card “liability shift” I keep hearing about?
The basic meaning is that, since credit cards with chips are the new Payment Card Industry [PCI] standard, if you, as a merchant, accept a card that turns out to be counterfeit but you didn’t know it was because your store doesn’t have credit card terminals that can read cards with chips, then the responsbility – “liability” — for that fraudulent transaction is passed – “shifted” — to you, not the bank.
In other words, if a merchant chooses not to use chip card readers, the merchant — not the bank – will be held responsible for the loss.
According to Visa's “U.S. Merchant EMV Chip Acceptance Readiness Guide”:
“The liability shift only is for counterfeit cards and does not pertain to lost and stolen cards. The party that is the cause of a chip transaction not being conducted (i.e., either the issuer or the merchant’s acquirer or acquirer processor) will be held financially liable for any resulting card-present counterfeit fraud losses.”
Two things to note:
1. Only “customer-present, card-present” transactions, in which a customer uses a card in your store, are subject to the liability shift. Customer-not-present transactions, such as Mail Orders, Telephone Orders, and online orders, are subject to the current terms of your processing agreement. WordStock enables you to classify individual card transactions as mail/telephone/online order on a per-transaction basis.
2. If a customer pays with a fraudulent magnetic-stripe-only card, i.e., a card without a chip, and the transaction is authorized, the bank, not the store, is responsible for the “chargeback.”
NB: In the PCI world, a “chargeback” is not like a book industry chargeback — it occurs when a customer successfully disputes a card payment transaction’s validity. If you choose to not to install chip-reading, EMV-compliant terminals, you should monitor the chargebacks section of your monthly bank statement(s) for unusual activity.
How do I found out what my store’s chargeback history is?
Your monthly report from Bank of America Merchant Services details chargebacks in a section labeled “CHGBK/REJECT/ADJ SUMMARY.” You may wish to use that information for evaluating your potential liability based on past experience.
What is WordStock's current overall direction with respect to upcoming industry-wide changes in credit and debit card processing?
After investigating the alternatives, we’ve concluded that the best solution to the liability shift coming later this year, with respect to EMV and PCI compliance, is the Verifone Point product.
