EMV Liability Shift Causes Ecommerce Confusion

In October 2015 merchant credit card processors will be shifting the liability of fraud over to merchants, unlike before when fraud occurred,  the onus of fraudulent charges will be on you.

Sounds scary right?

Well it really isn’t so bad (honest), and isn’t so scary, just really confusing.  Whether you have a physical storefront or an online store you probably have by now received something via email, a letter in the mail or perhaps even a phone call from your merchant provider attempting to explain these changes. Trouble is, these communications don’t really seem to be clearing things up, if anything they seem to be making the issue murkier.

As we get closer to this shift we have been receiving lots of calls from our clients and online store owners about the EMV Liability Shift and how it will apply to them. Let’s try and straighten this all out and take a look at the facts regarding credit card processing and how the EMV Liability Shift will effect you.

There are 2 types of Transactions in this world:

Card Present (CP):

This is where the person and their card is physically present, like in local retail shops, grocery stores etc.

Card Not Present (CNP):

This applies to phone orders, mail order, and of course transactions on your ecommerce website.

EMV CP (Card Present) FACT:

Your merchant processor will ask you if you want to upgrade your hardware to accept the EMV Chip Cards.

EMV CP FACT:

You don’t have to get the new hardware. (see below for liability)

EMV CP FACT:  

With CP (card present) transactions there is a 100% liability shift —- IF and ONLY IF you process an EMV Chip Card without using the reader, and it results in fraud, then you are 100% liable.

EMV CP FACT:  

If you process a EMV Chip Card using the reader and it results in fraud, the merchant card provider covers it, NOT the merchant.

EMV CNP (Card Not Present) FACT:

The specifics of the CNP (card not present) liability shift will depend on your merchant processor. Some won’t shift liability to CNP and some will, you will need to reach out them and ask.

EMV CNP FACT:

There is no EMV Chip Card technology for ecommerce that will work unless the customer has an additional piece of hardware connected to their computer or mobile phone (similar to the EMV Chip Card Reader at a retail location) to receive the one-time security pass code or use a unique PIN while checking out.

Considering the personal EMV Chip Card readers made for home use are the equivalent of the Sony Walkman in size (remember those?), and are an added expense for consumers we don’t see this taking off quickly, if at all, unless the burden of liability is shifted from merchant processors and store owners to the consumer. Which isn’t likely.

If you would like to recommend a passcode reader to your customers there are currently a few available for private purchase:

In summary, if your store is a physical retail location, get the reader and use it with EMV Chip Cards and it’s business as usual, if you don’t the liability is all on you. For CNP (card not present) and online ecommerce stores, it’s going to take some time for things to get caught up.

* Your shopping cart & gateway need to be compatible and be configured.

Dan LaBate

Dan is director of Search Engine Strategies at Engines of Creation Web Design & SEO. With 10+ years experience working in SEO/SEM, Dan helps businesses grow revenue and transform their websites into highly effective sales, marketing and lead capturing tools.

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