EMV Chargeback Policy Changes

August 5, 2016 | FasCard

The following article was posted by OpenEdge Payments on 7/13/2016
For more information: https://openedgepayments.com/emv/update.html

We value our partnership with you and strive to keep you informed related to significant updates across the payments landscape. You may have seen recent stories in the news regarding EMV chargeback policy changes. We’re contacting you to provide an update on how these changes affect you and your merchant customers, and what merchants can expect if they have not already upgraded their systems for chip card acceptance.

What’s the Latest on EMV?
The U.S. continues to see a slow rollout and implementation of EMV. We are now well beyond the start date of October 2015, and most merchants at this point realize there was no need to panic. In fact, only 17% of small to medium businesses using an integrated POS have upgraded to EMV.

The card brands have also taken a step back to evaluate the EMV rollout with both Visa and American Express recently modifying their chargeback policies for merchants who are not yet ready to accept chip cards. Those changes include a decision to block all US counterfeit fraud chargebacks under $25, effective July 22, 2016. According to their own research in the U.S., American Express discovered that 40% of counterfeit fraud chargebacks occur on transactions that are below the $25 threshold.

In addition, beginning October 2016, VISA and American Express issuers will be limited to charging back 10 fraudulent counterfeit transactions per merchant account, and will assume liability for all fraudulent transactions after the limit has been reached on an account. Both of these changes will remain in effect until April 2018. These changes to the EMV chargeback policies are designed to give merchants more time to upgrade their systems for chip cards while limiting merchant fraud losses.

Specific to the verticals that OpenEdge serves, we see low to moderate chargeback risk, with extremely low numbers of chargebacks reported. In fact, over the entire OpenEdge portfolio, only 0.005% of sales volume has been reported as EMV chargebacks.

What Does This Mean to Merchants?
This is good news for your customers. These changes give merchants more time to update their systems for EMV while reducing excessive chargebacks. Please note that there is no action required by your customers related to the updated EMV chargeback policies from Visa and American Express. The changes will be implemented automatically – no intervention is required.