The EMV liability shift gets very murky!

According to new research provided from our friend Tom McCrohan of CLSA America’s Research, less than 6 % of overall US merchants were set to meet the EMV deadline of October 1, 2015 for the shift of liability of fraudulent transactions.

As of September 15th, only 314,000 merchant locations were ready. At the same time, only 21% of the Visa cards in the US and only 40% of MasterCard cards were now chip enabled at the point of the deadline. The research further found that only 40% of merchants would have terminals by the end of NEXT YEAR – 2016.

Here’s how the liability shift shakes out after October 1, 2015. When a merchant is still using the “swipe and signature” methodology and the customer has a smartcard, the merchant is liable. If the merchant has the new Chip and PIN technology but the bank hasn’t issued the customer a Chip and PIN card, the bank is liable. If the merchant uses Chip and PIN technology on a customer’s smartcard and fraud still takes place, the credit card company bears the liability, as is the case today.

So based on the 40% issuance of chip enabled credit cards and the fact that it is estimated that only 6% of merchant are ENV compliant where is the liability shift going to fall?  The NRF or the appropriate government agency needs to step in and create a new timeline for compliance before it becomes a problem.