Pending EMV Liability Shift Increases Risk (To The Least Prepared)


Payment fraud in the United States is about to get a lot more interesting. The upcoming liability shift for EMV (chip-enabled) cards will create headaches for banks and merchants as fraudsters are more likely to shift their focus to utilizing fake accounts, counterfeit checks and duplicate-item fraud. Unlike cards that use magnetic strips which hold data that never changes, the EMV-chipped cards create a unique single-use code that can only be used once for card verification. For each subsequent transaction, a different code is created, making card counterfeiting much more difficult than with mag stripe cards.

Effective Oct. 1, 2015, the card-present fraud liability for MasterCard, Visa, American Express and Discover cards will shift to whichever party is the least EMV-compliant in a fraudulent transaction. If a customer uses an EMV card with a merchant that has not upgraded their technology to accept EMV cards and allows a counterfeit card to be used, the fraud cost is the responsibility of the merchant, not the card issuer. Due to this more secure card validation system, there will be increased fraud risk with card not present businesses and other methods of payment - specifically checks and ACH payments.

Prepare For The Flood

Canada had a similar EMV liability shift in 2011 and 2012 where they experienced a 300 percent increase  in fraudulent credit and checking account applications. Fraudulent activity often arises from bank accounts that have been open for six months or more, long enough for a fraudster to establish "normal" patterns. Schemes include identity theft, bad checks and fraudulent use of credit for cars and other merchandise that can be easily sold.

Merchants can best protect themselves by accurately recognizing good new customers at application, enrollment, or point of purchase. This requires real-time payment risk solutions that allow merchants to verify account and customer information quickly and accurately.  

Integrating Real-Time Payment Risk Services

The risk of fraud, lost money and loss of control is significant, but merchants can use the services of trusted payment risk experts to mitigate the increased risk while continuing to grow. Important components in a payment risk solution include:

  • Instant verification of customer bank accounts directly with the financial institution to ensure the account is open and active.

  • Real-time authentication of authorized signers on personal and business accounts.

  • Real-time identity proofing to support more stringent KYC (know your customer) requirements including: Name, address, Social Security number, driver's license, phone number and watch list screening.

  • Seamless integration into existing approval workflows.

October 1st Is EMV Day

Take a moment and consider how well prepared you are for the EMV shift taking effect on October 1, 2015. The reality is that there will always be risk out there, and it will keep getting tougher to control. You need a payment risk solutions partner that will help you mitigate as much of the risk as possible. Choose a provider that is easy to work with, offers in-house design and implementation services, and has the most up-to-date account and customer data.  _______________________________________________________________________________

What if accepting Check and ACH payments could be as easy and risk-free as accepting credit or debit cards? Giact provides comprehensive payment risk management solutions. Let us help you design the right solution. We offer a free evaluation, so there's no reason not to give it a try. To learn more, please contact us online or call 866-918-2409.


1. PYMTS, Sienna Kossman,


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