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The Impending 'EMV Chip Card' Conversion: Benefits & Liability Shift (Merchant Series)

You have likely heard about the EMV Chip Card conversion, but may not have all the information you need on what these cards and the new chip technology means for your business operations. We'll be sharing all you need to know about the changes to come in a three-part series, with part two focusing on the liability shift taking place on October 1, 2015 due to this new technology, and the benefits the system offers for businesses. 

Miss the first part of the series? Click here to read part one of the three-part series: What EMV Chip Card Technology Means & How It's Used.

What Liability Will I Now Have as a Business Owner/Merchant?  
As of October 1, 2015, if a merchant has not been certified through its acquirer as EMV-compliant, then the merchant will be responsible for all card-present counterfeit fraud losses. (Currently, under the card networks’ zero-liability regulations, issuers are responsible for card-present counterfeit fraud losses.) What this means is that issuers, acquirers, merchants, and others must start planning their course of action. For some that have minimal EMV transactions, accepting the risk imposed by the liability shift in favor of implementing compliance later might be the best strategy. For others, some EMV-related implementation is essential due to the volume of use or type of products sold, so planning should begin soon, if you're not already prepared. 

According to, most in the industry will say that there is not a reliable way to project the potential liability a merchant may face for card-present counterfeit fraud if it does not move to EMV since they do not have access to historical data on what these numbers have been for the issuers. Some acquiring processors have indicated that large retailers could face millions in liability if they do not move to EMV and that fraud will migrate to those retailers who do not implement EMV, while others have suggested that the cost of moving to EMV will likely not be justified solely by the potential elimination of fraud liability. Many predict that the retailers that are more likely to face a higher amount of liability for counterfeit fraud if they do not move to EMV are those that sell high-value items that are easy to resell (e.g., jewelry, electronics, prepaid cards, money orders, and wire transfers.)

Aside from the Liability Switch, What are the Benefits of Converting to the EMV (Chip) Card System? 
Depending in the type of business you have, the benefits will vary. However, some of the most notable benefits and important facts for merchants to know are as follows: 

  •  It is expected that increased use of EMV cards will result in a (perhaps drastic) reduction in card-present counterfeit fraud. Unlike EMV chip cards, which create unique data for each transaction, older magstripe cards are easy to “skim” and clone due to the static data contained in the magnetic stripe. A fraudster who steals a transaction number in an EMV transaction, however, would quickly find the data useless. EMV-chipped cards send and receive bits of information that are unique for every transaction, so the data can’t be used more than once. In other words, even if that information was applied to a counterfeit card, it would not be accepted.
  • The additional security bolsters consumer confidence, according to Visa. In 2013 alone, credit card and prepaid debit card fraud cost $157 billion, reports the Federal Reserve.
  • EMV (chip) technology may save business owners time and money through incentives such as the Technology Innovation Program (TIP). Merchants that process at least 75% of their transactions via a Dual Interface Terminal (an upgraded POS terminal that processes both contact and contactless payment cards, mobile devices and wallets, as well as traditional magnetic stripe cards) may waive their annual Payment Card Industry Data Security Standard (PCI DSS) validation.

  • Another important benefit of migrating to EMV, according to a blog post by Intuit Quickbooks, is that it enables merchants to accept contactless and Near Field Communication (NFC) mobile payments. Following its announcement to accelerate chip migration, Visa stated, “The adoption of dual-interface chip technology will help prepare the U.S. payment infrastructure for the arrival of NFC-based mobile payments, given that the underlying processing infrastructure and required back-end systems are the same as for EMV chip cards.” And while transactions involving mobile payments, such as Google Wallet and Apple Pay, only accounted for approximately $16 billion in sales during 2010, this figure is expected to rise to $214 billion by 2015.

Does making the switch to EMV-enabled system sound like it may be the best decision for your business? Stay tuned for the third and final installment, in which we will share a conversion toolkit to help guide you in making the conversion. 

If you need support in this transition or have any questions, we invite you to speak to a local, Florida banker on our Seacoast team by calling 800-706-9991. You can also learn more about Seacoast's Merchant Services by clicking here. We're dedicated to being a business partner you can count on to handle the details while you focus on your bottom line.