Importance of Being EMV Compliant | Transaction Services

EMV compliance is one of the most significant changes to the way retailers accept payments. However, despite the drive towards compliance, most businesses have been slow to make the move. Many retailers might just be waiting to see the effects on the industry before upgrading their systems, but if you want to avoid unnecessary liability, the upgrade to EMV is something to consider.

EMV Explained

EMV takes its name from three major credit card companies: Europay, MasterCard and Visa, who established the chip card standard. However, other major names in the credit and debit card industry, like American Express soon joined forces.

Chip card technology has been used successfully as a means of reducing card fraud, and the United States has been far behind other countries when it has come to introducing it. However, with fraudulent transactions soaring to $16.31 billion in 2014, it has been necessary to introduce a determined drive to protect against fraudulent transactions, hence the move away from the magnetic strip to the new chip cards, which are far more difficult to copy and shown to reduce fraud.

While retailers still have no legal responsibility to be EMV compliant, not complying could end up being costly in terms of chargebacks. Statistics indicate that despite the risks, most merchants in the United States still aren’t compliant. Research from MasterCard also shows just how slow retailers have been to comply. There are 282 million Visa chip cards in circulation in the United States, and Visa estimates that only one third of merchants are prepared to accept chip cards

The EMV Liability Shift

In October 2015, a significant change was made to EMV. From October 2015, under some circumstances, a retailer will become liable for fraudulent payments rather than their bank.  The changes meant that if your POS system has been upgraded to chip card technology, and the payment is made with a chip card, you won’t be liable. As the merchant, you will also be liable for transactions from lost or stolen credit card transactions.

Analysis shows that move four months into the liability shift, many retailers had yet to comply. However, this is a situation that is likely to change soon, with The Strawhecker Group predicting that the migration would pick up once the impact is felt on the retail sector, especially among high risk merchants.

The Importance of Being EMV Compliant

There are three main reasons you can benefit from complying: reduced fraud, lower chargebacks and the ability to accept mobile payments.

By far the most important reason for being EMV is the reduced incident of fraud, although some question whether this just changes the nature of fraudulent activity. Chip card technology has been used extensively in the UK and other countries for years and the research is clear: it does help to lower fraud. Chip card technology has been in use for a decade in the UK; over the ten years, there has been a dramatic fall in counterfeit and high street card or retail fraud with a reduction in losses of $91.2 million (£81.9 million) over the ten year period, according to the UK Cards Association.

In August 2015, The Nilsson Report indicated the scale of the problem, with fraud losses expected to total $35 billion by 2020.  David Robertson, Publisher of The Nilsson Report explains the impact EMV compliance can make when it comes to tackling fraud globally. He Said:

“Nothing mattered more than the lack of an EMV-compliant infrastructure.”

“EMV technology provides the best protection against losses from counterfeit cards, which accounted for 49% of all card fraud losses worldwide last year. U.S. issuers were slammed by losses due to counterfeiting, fueled by data center breaches that made available tens of millions of stolen card account numbers as well as personal cardholder identification information. The combination makes fraud tougher to fight. U.S. issuer losses due to counterfeiting of $3.89 billion last year accounted for 23.9% of all global fraud losses.”

EMV Compliance Can Lead to a Reduction in Chargebacks

Retailers understand that chargebacks are all part of their business, especially in the world of ecommerce, where buyers can’t view the product’s suitability first, or when a consumer can’t always remember making the purchase. Regardless of whether you own a physical or ecommerce store, chargebacks are damaging to business.

Chargebacks can have a considerable impact on your bottom line and an excessive number of them can limit your chances of finding a new merchant services provider should you need to change companies. If you have a physical store, you have a better protection from chargebacks if you are EMV compliant.

EMV Compliant Businesses Can Accept Contactless Payments

While contactless cards have been soaring in popularity around the world, they have been a little slow to catch on in the United States. However, the move towards chip cards, means contactless payments are surging in popularity in the United States. Statistics show that mobile payment transactions were predicted to grow by 210 per cent in 2016, and by 2019 there will be nearly 70 million mobile payment users in the United States. Given the growing figures, the ability to use EMV compliance technology in conjunction with contactless payments could give your business a boost.

Avoiding Chargebacks

The first thing to remember is that not all chargebacks are fraudulent. They can occur when the buyer goes back to their card issuer rather than the retailer for a refund, or your buyer might have brought an item, decided they don’t like it, and instead of returning it, initiate a chargeback with their bank.This is known as ‘friendly fraud’ and you can lower your chances of it by having a clear returns policy and making it as easy as possible for a customer to return an item to your store.

  • Limit your risk of EMV chargebacks by make sure you use your EMV compliant system in accordance with best practices.
  • Don’t accept stripe payments for chip pin card. If the transaction is fraudulent or the card lost or stolen, you will not be covered.

There are more tips on reducing EMV chargebacks here.


Making the simple switch to an EMV compliant terminal has numerous benefits to your business. It can boost profits by reducing chargebacks and lower your exposure to fraud, and with the growing cost of fraud to the retailer sector, it is vital that action is taken to address this issue.