The USA Fraud Liability Shift: Countdown to 2015

​​​​​​​​​​​October 1, 2015

All of the major card brands (Visa, MasterCard, American Express, and Discover) have announced plans to shift the liability for counterfeit card fraud losses, which is currently held largely by card issuers, to merchants and their acquirers, unless both parties implement EMV. The new liability rules will take effect on October 1, 2015. Any party that hasn’t implemented EMV may be liable for the fraud that results from a magnetic-stripe payment after that date.

To further motivate merchants to install EMV-capable payment systems, many card brands are offering additional incentives like PCI-DDS audit relief or reduced chargeback fees.

ATMs and fuel-dispensing stations will have more time to upgrade (see the complete timeline below).

While each of the card brands uses different language and incentives in their fraud liability shift policies, the intent remains the same: to accelerate the adoption of EMV in the U.S. on both the issuing and merchant sides.

​What this means for card issuers

​If a counterfeit charge occurs one of your EMV cards, liability may shift to the merchant or their acquirer, if the card wasn’t processed using the chip.  Card issuers are getting ahead of the game by issuing cards well ahead of the October 1, 2015 liability shift date.

What this means for merchants

Merchants who accept in-store payments may be liable for fraudulent transactions beginning October 1, 2015 if an EMV card is presented but the merchant chooses to process the payment using the magnetic stripe instead.  Merchants can prevent this by installing EMV-enabled terminals.  Fortunately nearly all POS terminals sold today in the US are EMV-ready.

Milestones to EMV