Why July 22nd Matters To You
If your credit union is a card issuer, mark your calendars. July 22nd is a day to remember.
Responding to merchant complaints about the length of time it is taking to get their EMV compliant Point- of-Sale terminals certified, Visa announced in June that it is limiting chargebacks that issuers can impose on merchants. Amex has also announced similar changes as has MasterCard. Here is a technical breakdown of the specifics.
Remember that, effective October 2015, liability for counterfeit card transactions shifted from always being the responsibility of the issuing bank or credit union to merchants whose POS terminals could not process EMV chip enabled transaction.
Even though this liability shift was announced in 2011, a last second rush by merchants has created a bottleneck. One of the main problems is that the terminals must be certified as EMV compliant and this process is taking longer than anyone anticipated. Starting July 22nd and lasting until April 2018 Visa will block all U.S. counterfeit fraud chargebacks under $25. In addition, effective October 2016, issuers will also be limited to” charging back 10 fraudulent counterfeit transactions per account, and will assume liability for all fraudulent transactions on the account thereafter.” Visa estimates that these changes will result in 40 percent fewer counterfeit chargebacks, and a 15 percent reduction in U.S. counterfeit fraud dollars being charged back.
Merchants have been complaining about the volume of chargebacks since the change took effect. They even sued Visa and MasterCard to block chargebacks based, in part, on complaints about the certification process.