To combat the growing issue of credit card fraud, U.S. financial institutions are issuing EMV-chip-enabled credit cards that make it harder for thieves to steal credit card information.  Approximately 40 percent of U.S. consumers report receiving the new cards with EMV chip-technology.

These EMV (Europay, MasterCard and Visa) chips improve transaction security at point-of-sale by creating a unique code with each purchase that is hard for thieves to replicate.

With this effort comes a “liability shift” that went into effect on October 1, 2015. Financial institutions will no longer bear the burden of fraudulent credit card charges, instead moving that responsibility to retailers who have not upgraded to EMV payment terminals to process chip-enabled credit cards.

Bottom Line for Businesses: Businesses that have not upgraded to EMV-enabled payment terminals (replacing the old credit card swipe machines) will be liable for any fraudulent transactions on an EMV credit card used by one of their customers as of Oct. 1, 2015.

Retailers are not required to install the EMV terminals (and less than 1/3 merchants were expected to have the technology in place by Oct. 1) but businesses do risk fraud liability by continuing to use old card scanning equipment.

Whalen & Company, CPAs wants to ensure all of our clients who accept credit card payments are aware of this shift.

More Information:

• Wall Street Journal “Cost of Credit Card Fraud is Set to Shift” 
• CNN Money “Got a New Credit Card in the Mail? Here’s Why” 

• Category: Client Alerts
• Tag: chip credit card changes, credit card liability shift, emv chip card changes, emv chip card reader