NRMA offers the latest updates on chargebacks via our guest blogger, Heartland Payment Systems. Take a few minutes to see how this impacts you and your restaurant.
EMV chargeback policies have been modified to limit the number of fraudulent transactions that issuers can charge back to merchants (and their acquirers).
Historically, issuers have been responsible for the full cost of counterfeit fraud that takes place at a merchant. In 2011, to support the migration to EMV chip technology, Visa announced a liability shift that became effective in October 2015. With this change, the cost of counterfeit fraud is the responsibility of the party – either the merchant or the issuer – that has not implemented chip technology.
However, Visa says given that some merchants are still working to get their chip terminals enabled and certified, they may now be bearing the cost of counterfeit fraud originated in their stores. Visa’s actions today seek to alleviate the impact on merchants while they work through the transition.
Visa and American Express have modified its policies to limit the number of fraudulent transactions that issuers can charge back to merchants (and their acquirers). Effective July 22, 2016, Visa blocked all U.S. counterfeit fraud chargebacks under $25 and effective August 31, 2016, American Express blocked all U.S. counterfeit fraud chargebacks under $25. These smaller chargebacks generate a great deal of work and expense for merchants and acquirers, with limited financial impact for issuing banks.
In addition, effective October 1, 2016, Visa issuers were limited to charging back 10 fraudulent counterfeit transactions per account, and will assume liability for all fraudulent transactions on the account thereafter. This reinforces the responsibility issuers already have to detect and act on counterfeit fraud quickly. These blocks will stay in effect until April 2018.
Also, effective October 14, 2016, MasterCard issuers were limited to charging back 15 fraudulent counterfeit transactions per account, and will assume liability for all fraudulent transactions on the account thereafter. MasterCard will also block chargebacks if authorization was attempted after the card reported fraud and they will automatically block invalid EMV disputes
These changes together will significantly reduce the number chargebacks that merchants are seeing. Following these changes, merchants can expect to see 40% fewer counterfeit chargebacks, and a 15% reduction in U.S. counterfeit fraud dollars being charged back.
To summarize:
Visa
Effective July 22, 2016, Visa will no longer allow EMV counterfeit chargebacks for sales under $25
Effective October 1, 2016, issuers will be limited to charging back 10 fraudulent counterfeit transaction per account
AMEX
Effective end of August 31, 2016, AMEX will no longer hold merchants liable for chargebacks of counterfeit fraud sales under $25
MasterCard
Effective October 14, 2016 MC will limit the chargebacks to 15 per card account. MasterCard will also block chargebacks if authorization was attempted after the card reported fraud and they will automatically block invalid EMV disputes.
For more information on EMV, visit Heartland Payment Systems.
