If you have traveled outside the United States -- even to our neighbors to the north -- you have had an encounter with the EMV chip. The EMV chip is an anti-fraud measure that helps to authenticate credit card transactions.
These days, if you take a standard credit card from a U.S.-based institution to Canada, you’re sure to get some odd looks: “Where’s your chip?” The subsequent lack of said chip is one reason you might find yourself punching in your PIN over and over and over again while traveling.
With universal adoption, however, EMV is poised to become a major convenience:
With all of these benefits -- and all of the ongoing headlines about major data breaches at big businesses of all kinds -- why haven’t you seen major EMV adoption in the United States?
Up until very recently, there has been no driving motivation for financial institutions in the U.S. to adopt EMV. However, that is soon to change -- and the day is coming up very quickly. Why?
The reason is something called “The Liability Shift,” and it’s built into the financial landscape to motivate investments that could bring short-term pain -- with the promise of far worse liability for companies that don’t come aboard.
Here in the United States, consumers are never responsible for fraudulent charges made on their cards. Up until recently, the merchant in the transaction would be forced to absorb the losses.
In October, 2015, however, this will no longer be the case.
In theory, the liability shift will move liability for most fraud to the issuing bank. If there are multiple financial institutions involved, however, the liability will shift to the enterprise that has failed to adopt EMV technology.
This is great news for merchants, as it could save millions -- however, merchants need to be sure that they have reliable ACH and credit card processing services in place by October, 2015. If not, they could still find themselves liable.
For fast, secure, timely ACH and credit card processing, call National Processing.
Posted in credit card processing on Nov 04, 2014