The Chip Card Gamble -- A Risky Proposition.

If you’re one of the U.S. business owners taking a wait and see approach to adopting chip card technology, your wait may be over.

In the wake of the October 2015 liability shift, many merchants are feeling the pain of chargebacks involving fraudulent chip card transactions, and costs are mounting for those that have not yet updated their POS to handle the new technology.

Under terms of the liability shift, if a business does not have chip card technology, and swipes a fraudulent chip card for payment, the business is liable for all losses.

Initially, merchants with high-ticket, easily fenced merchandise like jewelry and electronics were considered the only ones at risk for high potential losses from card fraud. But smaller businesses, typically considered lower risk, are now starting to catch the attention of counterfeiters, especially as the spread of chip card technology narrows their available field of targets.

As fraudsters become more brazen, so do the losses from their schemes.

A jewelry storeowner processing with TSYS Merchant Solutions recently lost more than $900 in merchandise to a counterfeiter. After receiving a chargeback for dispute reason 62 (counterfeit transaction), the storeowner responded with a signed, swiped transaction receipt and a note stating there was nothing suspicious about the sale. The card issuer provided certification that the cardholder denied participating in the disputed transaction and that the transaction was not initiated with a chip enabled terminal. Because the merchant did not have a chip enabled terminal, and accepted a fraudulent chip card by swiping it, the owner was out both the cost of the chargeback and the cost of the merchandise.

Another TSYS customer had a better experience following a chip card related chargeback. The owner of a clothing store received a chargeback in the amount of $204 for dispute reason 4870 (chip liability shift). The owner responded by providing a copy of a signed sales receipt and a terminal receipt that recorded the POS entry was a chip card. Because the owner was able to prove the chip card was processed with a chip enabled terminal, the issuer became liable for the transaction and the $204 chargeback was reversed.

While there is no mandate requiring businesses to adopt chip technology, the above examples indicate just how risky not making the transition can be. Protecting your business may be as simple as adding a chip-enabled terminal. And in many cases there is no cost involved.

If you’d like more information about the transition, check out the EMV resources on our website and download our eBook titled “EMV®, Tokenization, & Encryption: The Path to Securing Your Small Businesses.”

If you’re ready to make the transition, let us know. We’re ready to help with chip card incentives – including a free chip card terminal offer – along with solutions that keep businesses like yours on the safe side of the liability shift.

Contact us at +1.800.228.2443 or online.

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