Liability Shift Driving EMV
Despite the costs and embarrassment of card data security breaches, a looming liability deadline remains the most potent prod forcing card issuers and retailers to adopt new EMV technology, according to a leading payments executive.
Randy Vanderhoof, executive director of the Smart Card Alliance, an association created to develop and promote the usage of EMV chip cards in the U.S., said a recent FBI report on threats to card data security should spur both card issuers and retailers to adopt the new technology.
But Vanderhoof remained uncertain if continued breaches would be enough to break the logjam between issuers and retailers on EMV adoption.
“We are in the situation now where thieves are targeting our payment system because we are the only developed world payment system that doesn't use EMV cards,” Vanderhoof pointed out. “They are going to continue doing so until we begin using them.”
Vanderhoof said a liability shift deadline on Oct. 1, 2015 could accelerate the EMV push.
“Right around the corner,” Vanderhoof said.
The Alliance considers the October date key because liability for fraudulent transactions will move to the weakest link in the transaction.
If a consumer uses a magnetic stripe in an EMV-capable POS terminal and the transaction turns out to be fraudulent, liability will rest with the issuer of the original magnetic stripe card.
However, if a user uses a magnetic stripe card for a fraudulent transaction on a terminal which cannot process EMV, the liability for the fraud will rest with the merchant.
“The liability shift is coming quickly,” Vanderhoof observed. “I haven't heard of any of the card brands postponing it.”