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.
The problem with using PINs at terminals was more complex and caused a lot of finger-pointing. The use of PINs at a card reader requires access to a PIN processing network. But with the advent of EMV cards, the credit card companies decided the PIN network they'd been using wouldn't do and required a new authentication network, run by (surprise!) Visa and MasterCard.
Another complication emerged when the credit card companies decided that merchants no longer could require the use of PINs, but had to allow the use of signatures with the chip-enabled cards. Perhaps it should be no surprise that the processing of signatures through those captive networks suddenly was much more expensive than it was to use other networks.
Merchants, then, were being hit in two directions: They were seeing a huge increase in chargebacks because of fraudulent card use, yet they couldn't protect themselves by demanding the use of more secure chip and PIN cards.
In some cases, the situation was worse than it had been: Merchants were not able to insist on PIN use for chip-enabled debit cards, which meant they had to accept the liability for those in addition to the credit cards.
Because of those issues, there are two sets of lawsuits. In one, some large retailers including Walmart, Home Depot and Kroger are suing because the credit card companies and their issuing banks won't let them require PINs for payment cards that have them, including debit cards, for which, until now, PINs were the standard.