Steps to help card-present merchants minimize the flood of EMV Chargebacks
Six months after the credit card fraud liability shift, merchants who have not implemented chip card technology are complaining about a larger number of chargebacks than they expected. One payment network reports an increase of 50% in chargebacks for card-present transactions among some 250,000 merchants.1
The reasons for the large increase are not clear. Some fear abuse of the chargeback system, but card companies say that the increase is normal and similar to what was experienced in other markets where EMV was introduced.
They note that all EMV chargebacks are new to merchants and urge them to adopt chip technology to avoid the liability. However, some experts worry that smaller merchants who don’t want to deal with the chargebacks will give up and desert the payment card system altogether.
A few merchants have resorted to suing the networks and issuers, claiming that they were not given enough time and were not warned of the large dollar amounts involved.2 The card companies counter that merchants have had five years to prepare and they should know the new rules. Industry experts say that card companies are working with merchants to smooth out the bumps in the chargeback system.
Many merchants already have EMV terminals but face delays from processors who are not EMV ready. A shortage of technical expertise is also delaying adoption of the technology. Stricter EMV installation requirements recently adopted by VISA could be adding to the problem.
While the industry sorts out EMV, we consider it worthwhile to help merchants avoid as many chargebacks as they can by understanding the EMV chargeback landscape.
It’s interesting to note that the risk of fraud may have increased for those merchants without EMV. Smart criminals will avoid merchants with EMV terminals, making those without them more attractive targets.
Processing transactions correctly at the time of the sale is the most effective way to avoid EMV chargebacks. Here are some best practices:
The one best thing you can do to avoid chargebacks is to upgrade to EMV chip card terminals, shifting the fraud liability back to the banks. Check with your processor to see if they are ready and can certify proper installation.
VISA now requires that only PCI-certified Qualified Integrator and Resellers (QIR) professionals should be used by Level 4 merchants for the installation of POS terminals, application implementation and integration services. QIR certified professionals have received advanced training to ensure the proper installation and data security of POS systems.
To avoid unnecessary chargeback liability, make sure that retail employees are well-trained on these ways to spot counterfeit credit cards:
As the industry moves forward with EMV adoption, merchants who take a proactive approach to avoiding chargebacks, whether or not they are EMV ready, will be in the best position to benefit from the technology change. Proper implementation of EMV technology is the key to a successful transition.
eMazzanti leverages advanced training and close relationships with major retail technology and merchant services companies to provide your retail operation with QIR-certified EMV technologies and services and increase your technology return on investment (ROI).
Retailers have a choice in technology providers. The right retail technology partner delivers ongoing value by recommending improvements to reduce risk and keep a merchant’s IT business strategy up-to-date.
1Kevin Woodward, (March 4, 2016). EMV Chargebacks Proving to Be a Card-Present Merchant Problem [Article]. Retrieved from http://www.digitaltransactions.net/news/story/EMV-Chargebacks-Proving-To-Be-a-Card-Present-Merchant-Problem
2John Stewart, (April 4, 2016). How EMV-Related Chargebacks Drove Florida Merchant Duo to Sue Networks and Issuers [Article]. Retrieved from http://t.digitaltransactions.net/news/story/How-EMV-Related-Chargebacks-Drove-Florida-Merchant-Duo-to-Sue-Networks-And-Issuers
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