Some in the payments industry saw this one coming, but nobody expected it to be this big.
Card-present merchants are experiencing up to a 50% increase in chargebacks since the EMV liability shift took place last October. Under the new policy, merchants who don’t process a chip on an enabled card during a card-present transaction accept unilateral liability in the event of a cardholder dispute.
The theory is that some cardholders and issuers are using the liability shift to their own advantage. In cases where a chip-enabled card was swiped instead of dipped at the point of sale, cardholders can simply dispute a transaction and the issuer can immediately charge it back with no merchant recourse.
Likewise, issuers could charge back uncollectible transactions, thereby avoiding a chargeoff expense to the issuer by shifting the cost to the merchant.
Of course, it’s just a theory…