There is a big change related to credit card fraud liability that went into effect on October 1, 2015, but it is still unclear to many how the risk of loss is shifting and what the impact will be to their businesses.
Before you spend money and time adding the capabilities to accept the credit card chip, there are some questions to ponder:
- Do you know how many charge-backs you are currently getting for counterfeit, lost or stolen cards?
- What is the liability that your business is now going to be exposed to?
- Is the investment worth the reward?
Retail businesses and restaurants will still be able to accept the magnetic strip credit cards as a method of payment, just as they have in the past; however, if you continue to accept magnetic strip credit cards, has your liability exposure shifted? Well, the answer is: it depends.
If you decide to keep the current method of payment and the customer has a credit card with chip capabilities, your business will now be liable for any fraud resulting from a swipe at your terminal from that card with a chip. However, if the customer card does not have the chip technology, the fraud liability remains the same as it is today. If you implement the credit card chip processing, the fraud liability risk also remains unchanged.
Implementing the capabilities to accept the credit card chip is not required, but it may be worthwhile to implement for the added security, or at least worth the time to do a cost analysis of the risk exposure.
© Clark Nuber PS and Focus on Fraud, 2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Focus on Fraud with appropriate and specific direction to the original content.