Major US credit card associations including Visa, MasterCard, American Express, and Discover have set October 1, 2015, as the deadline for merchants to implement the Europay, MasterCard, and Visa (EMV) standards. EMV standards include requirements for physical card terminals and a shift from magnetic stripe cards to chip-embedded cards. In order to comply with these standards, banks have been sending out compliant chip-embedded credit and debit cards to their customers. These chip-embedded cards are more secure than traditional magnetic swipe cards since each use of the chip-embedded card creates a unique transaction code that cannot be used to process another transaction or create a fraudulent card. Merchants and retailers also have to take action by updating their card reader terminals and technology if it is not EMV compliant already. This push for compliance will bring the U.S. market in line with the payment card standards around the world and is intended to help reduce the growing problem of credit card fraud in the U.S.  

While compliance by October 1 is voluntary, not being in compliance could cause merchants and retailers to take on increased financial liability for fraudulent card transactions. Currently, the financial institution that issues the cards generally bears responsibility for fraudulent transactions. Starting October 1, a liability shift will occur where the liability is shifted to the party that has not adopted the EMV technology. For instance under Visa’s new rules, if a chip card is used at a traditional magnetic stripe-only terminal to conduct a counterfeit transaction, then the retailer will be liable for the transaction because it did not invest in the chip technology. On the other hand, if a chip card is used at a terminal with chip technology to conduct a counterfeit transaction, then the issuing financial institution will continue to be liable for the fraudulent transaction. The shifting rules vary slightly among Visa, MasterCard, American Express, and Discover so it is important to understand how the shifting rules work for each. There are some exceptions to the liability shifting including card-not-present transactions and lost or stolen cards. Automated fuel dispensers and automatic teller machines are not currently covered but liability is set to shift on these transactions in October 2017.