The liability shift that occurred a year ago brought a significant amount of confusion to consumers and merchants alike. One source of confusion stemmed from the difference between installing an EMV-compatible payment terminal and certifying it, according to PYMNTS.
Simply replacing the terminal isn't enough, but many merchants weren't aware of this. The result was frustration and befuddlement. Additionally, unexpectedly long certification processes prevented retailers from becoming compliant in a timely manner.
To address these issues, Visa has announced several initiatives to help benefit merchants.
"Visa recognizes the importance of having the industry help merchants get their chip terminal solutions up and running quickly so that everyone, especially consumers, can benefit from the powerful security protection of chip technology," Oliver Jenkyn, group executive North America at Visa Inc., said in a statement. "We've taken steps to simplify the process as much as possible and help reduce any challenges so merchants can move forward with chip adoption quickly."
It's important for credit unions to be aware of these changes because they affect financial institutions, especially those that issue cards, as well.
Visa's new measures
The first measure Visa took addresses the certification process directly. Testing requirements previously affected the certification process in terms of length of time and cost. The certification process has now been simplified to allow acquirers to determine the appropriate level of testing required for particular retailers. In the future, Visa hopes to implement a system that allows acquirers to share testing results with others to prevent unnecessary duplicate testing.
Another initiative pertains to the losses that merchants now sustain when fraudulent activity occurs in their store. This change is twofold: The first step was implemented in July and the second in October of this year.
Previously, all chargebacks were charged to the retailer, which required the business owner to spend time and money managing them in addition to the losses sustained due to the fraudulent activity that prompted the chargeback. Starting July 22, this only applied to chargebacks that were $25 or more; smaller amounts were instead charged to the issuer. This means that credit unions that issued EMV cards may see these charges come their way.
A limit to the number of chargebacks per account was implemented in October. The first 10 chargebacks on a consumer's account are to be handled by the merchant, but the card issuer will assume responsibility for the 11th or any chargeback thereafter.
Both measures will be in place until April 2018.
These changes certainly benefit merchants, but it's important that credit unions and other card issuers are aware of these changes. It would behoove credit unions to inform retailers in their area on ways to improve their EMV capabilities, not only to benefit the merchants, but also to prevent chargebacks from affecting their own business.
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