Chargebacks to merchants have become a hot topic of late. And for good reason. According to a recent report by First Annapolis Consulting, chargebacks for card-present transactions increased 50% following the Oct. 1 EMV liability shift. While this took merchants by surprise, it did not surprise issuers who, until the October 2015 liability shift for chip cards processed at card-present non-chip terminals, were absorbing the cost of fraud for counterfeit cards. Now issuers are allowed to charge back, or pass back the fraud to the merchants who were not processing chip cards.

Delays in Terminal Certification Causes Backlogs

Many merchants had their chip-capable terminals in place in time for the liability shift, or shortly thereafter. The problem arose that chip-reading hardware wasn't enough; the terminal had to be certified. Some merchants didn't know how to obtain the certification while others were waiting on their terminal vendors or third-party organizations to perform the certification. These vendors and third parties were swamped with requests and faced with an entirely new process, creating a backlog that continues today.