Fed Up Merchants File Lawsuits Over EMV Credit Card Chargebacks
NEWS ANALYSIS: Merchants are taking legal action against big credit card companies and banks over excessive chargebacks and complex rules that weaken security.When the EMV card liability shift happened in October 2015, the situation seemed to be fairly straightforward: If a merchant wanted to avoid new rules transferring liability for stolen or counterfeit cards to them, they needed to accept the more secure types of payment cards outfitted with a Europay, MasterCard and Visa chip. Those cards, widely accepted nearly everywhere in the world except in the United States, are nearly impossible to counterfeit and provide great security in transactions because they can be used with a PIN code authenticated by the credit card network. Unfortunately, that's not how things worked out. October came, and merchants began buying the new credit card readers and point-of-sale (POS) systems designed to accept the EMV cards. But then the merchants found that their supposedly secure transactions actually weren't secure, and the credit card companies weren't protecting them from losses despite their buy-in to the new technology. This was because the big credit card companies, primarily MasterCard and Visa, were requiring that each credit card terminal be certified and because those same companies were not permitting the use of cards that used PIN codes for authentication.
Merchants soon learned it was nearly impossible to obtain certifications for those terminals from the credit card companies. Furthermore, even though merchants had the new credit card terminals, they were getting hit with the cost of fraudulent transactions anyway.