DIAMOND BAR, Calif. (Sept. 25, 2015) — The Specialty Equipment Market Association (SEMA) is alerting its member companies that in October the major credit card companies will shift 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, Visa and MasterCard — the companies that initiated the move to the chip-based payment system in response to data breaches and fraud.
Liability for credit-card fraud has traditionally been borne by the issuer, not the merchant, SEMA pointed out. 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, according to the Diamond Bar-based trade group.
Because 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, SEMA said.