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EMV Chargebacks Proving To Be A Constant Problem For Merchants

EMV Chargebacks Proving To Be A Constant Problem For Merchants

Since the October 2015 EMV liability shift, merchants are now responsible for chargebacks if they are the least secure party in the transaction process – meaning the party that cannot accept EMV payments. Previously, banks and card issuers absorbed chargeback costs. Merchants have continued to speak out against the associated rise in chargeback costs, and have even gone so far as suing the major card brands.

Last year, Visa and American Express implemented policies to limit chargebacks under $25.00 in an effort to mitigate costs for merchants. American Express found that more than 40 percent of its counterfeit fraud chargebacks were under $25.00. Criminals often try making small purchases, typically less than $5.00, to test the validity of the stolen card and ensure it works before moving on to larger, more noticeable purchases. Visa and American Express are also limiting the number of counterfeit fraud chargebacks a consumer reports to ten chargeback insistences per card. These two companies will accept financial responsibility for any chargebacks after the consumer’s card has reached ten chargebacks.

However, the $25.00 limit implemented by the card issuers does not protect merchants from high-dollar chargebacks. A new report by Vesta Corporation shows that chargeback costs have continued to rise: “62 percent of respondents (including 55 percent of respondents with a CFO title) had seen both the number and dollar amount of credit card chargebacks increase since the introduction of EMV chip cards.”

Many merchants are doing all they can to get EMV-certified, but the process is lengthy. “57 percent of merchants have installed EMV equipment, but cannot enable it because they are still awaiting system certification. Of those, 60 percent have been waiting six months or longer.” In the meantime, when fraudulent transactions take place, the merchant will remain liable.

To avoid waiting in a lengthy certification queue, merchants should consider implementing a semi-integrated payments solution. In this way, merchants can easily and affordably accept EMV payments, without completely changing their current payment setup. The best payment solutions work with leading point-of-sale (POS) terminals like MICROS, POSitouch, and InfoGenesis, to name a few. This also cuts down on the amount of time needed to train staff, as they’re able to use the systems they know and are familiar with. Lastly, a semi-integrated payment solution should come with the latest payment security technologies (like tokenization and encryption) built in, to help further protect their business and their customers’ payment card data.

With MiPoint, our PCI-certified and EMV-compliant payment solution, merchants can start processing EMV transactions right away – reducing their financial liability when it comes to chargebacks. Get in touch with MiCamp today to find out more about becoming EMV compliant.

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