Will the EMV Liability Shift Really Impact Your Credit Union?

by. Brandon Kuehl

By October 2015, Visa and MasterCard will shift fraud liability to the party (issuer or merchant) with the least secure method of processing transactions. For the purposes of this deadline, both Visa and MasterCard deem EMV chip technology to be the most secure transaction method available.

Many community financial institutions (FIs) are wondering if they should be racing to make this deadline. Here are some factors to consider as you plan your FI’s EMV strategy:

If your FI is issuing EMV chip cards by October 2015, you will likely see a decent amount of fraud liability being pushed to the merchant. Analysts predict (and some retailers admit) merchants will be slow to adopt EMV. That means if your cardholder is “doing everything right” by Visa and MasterCard standards (i.e. using an EMV-enabled card) and many merchants are not, fraud experienced in your portfolio will become the responsibility of those ill-equipped retailers.

Each issuer will experience different levels of this shift, of course. We anticipate small and mid-sized credit unions and community banks will see somewhere between 20 and 50 percent of their fraud liability become that of the merchants’.

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