Exactly how this works is best shown in a flowchart that Hoffman uses to make the liability shift clear. The problem, unfortunately, is that the merchant may be liable for transactions involving counterfeit cards even if they've done everything right, but when one of the third-parties in the chain drops the ball.
Hoffman said that the companies with the biggest risk are those that sell what could best be called cash equivalents using credit cards. A good example might be the gift cards grocery stores sell. Those gift cards can be converted immediately into cash, and even if the fraud is uncovered later, the criminal gets away with it. He said that another example are stores, such as electronics retailers, that sell products that are easily resold.
The problem, unfortunately, isn't likely to be fixed in time for the Oct. 1 deadline. "The EMV certification process is taking longer than anticipated," said Michael Grillo, director of solution marketing for ACI Worldwide. "By the end of the year, maybe 30 percent of large merchants will be EMV-certified."
Grillo said that the process worked much the same way in other countries where EMV chips were introduced, but he said a big difference is in the awareness on the part of card users. Grillo also said that consumers outside the United States were much more aware of what EMV cards were and how they worked. "But there was a lot more emphasis on awareness at the consumer level."
Part of the problem is that there has been no major consumer education effort. As a result, nobody has a good idea of how to use the new cards and what they're expected to accomplish.
Hoffman said that he can see circumstances in which some businesses may have to fold because of losses related to the liability shift. He suggested that owners of those stores—especially stores that sell things like gift cards or lottery tickets, as is the case with some convenience stores—find ways to contain their losses, even if it means limiting sales of easily negotiated things.
Hoffman suggested that merchants with credit card processors that aren't able to support the security and certification required for EMV think about finding another processor. He also recommended that if the merchant is locked into a contract, it might be a good time to seek legal advice.