Transition to Chip-Card Payment System to Shift Liability Onto Merchants

By SEMA Washington, D.C.

In October 2015, the major credit card companies will be shifting liability for fraud onto merchants that do not make the switch from payment terminals that read magnetic strips to terminals equipped with electronic chip-reading technology. The international standard for chip cards and chip-reading terminals is “EVM,” which stands for Europay, MasterCard and Visa—the companies that initiated the move to the chip-based payment system. 

Liability for credit-card fraud has traditionally been borne by the issuer, not the merchant. This shift of liability from issuers to merchants has come in response to the increasing threat of identity theft and fraud. The more secure EVM system allows for immediate authentication without transmission of sensitive information outside the payment terminal. Recent high-profile data breaches exposing customers’ payment information have resulted in billions of dollars in damages to card issuers. Chip card technology and the EVM standard are expected to help reduce the costs of similar breaches in the future. 

For more information, please contact Ashley Ailsworth at