Avoid chargebacks by using EMV chip card technology

By: Amy

If you accept credit cards at your business, chances are pretty good that you’re familiar with the new EMV technology used to process credit cards that have an embedded data chip. It’s an important piece of information to have considering that in October 2015, liability for certain fraud chargebacks shifted to merchants when a chip card is presented in-store, and not processed with EMV technology.

Many merchants are still unaware of the risks of using traditional POS systems and terminals when accepting a chip card payment. Since chip cards are theoretically impossible to duplicate or clone, the only way for fraudsters to use them is at merchant locations where EMV is not in use. The chip cards being issued today, and likely for the next several years, have both a chip and a traditional magnetic stripe so they can be used in both types of terminals. Without the technology to authenticate an embedded data chip, merchants may inadvertently accept a fraudulent card. When that happens, the merchant will likely receive a chargeback.

Handling some chargebacks is par for the course when you operate a business. But if you’ve ever handled a one, you know how cumbersome and time consuming the process can be. You have a certain number of days to respond, must provide the correct documentation, and then you wait for a response. You may be required to submit additional information before a judgement is reached. And, if you’re found to be at fault, there are fees and penalties, in addition to the loss of funds for the items you sold. It’s not a positive experience overall, and one that most merchants despise.

The bad news for merchants without EMV technology is that fraud chargebacks are going to increase over the coming years. The reason is fairly simple to understand: fraud is a booming business. When one door to fraud closes, more traffic flows through the remaining open doors. EMV only closes one door on fraud: card present transactions in locations with EMV technology. That means other avenues, like card not present online transactions, and in-store non-EMV transactions are still vulnerable and can expect to see a sharp increase.

Implementing an EMV capable terminal or POS system is the best way to avoid the coming influx of chargebacks. There is a variety of EMV solutions on the market today and more to come as POS developers continue to innovate to provide enhanced solutions with added value like built in encryption and tokenization.

Be sure to ask your payment processor about the EMV solutions available to you or contact USA Payment Solutions for more information about secure payment processing solutions, including EMV.

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