Amex Changes EMV Chargeback Policy

June 27, 2016

The transition to chip cards, or EMV (Europay, MasterCard and Visa chip technology) hasn’t been an easy one for merchants to adopt. In order to ensure that they are compliant with new rules, merchants have had to upgrade credit card processing systems in order to accept the new chip cards. Failure to do so leaves the merchant responsible for fraudulent charges, since old systems leave gaps in security features.

As you can imagine, this can quickly add up to a frightening liability, all due to neglecting to upgrade their credit card processing system.

American Express Relieving the Stress of EMV Chargebacks

The EMV chargeback liability that could extend from merchants being responsible for fraudulent charges is huge, and American Express seems to understand that it might be a little too burdensome and punitive for merchants who are struggling to update expensive credit card processing machines. That’s why, by September 2016, American Express will no longer be charging back for fraudulent transactions under $25.

Sensing that maybe this isn’t enough, American Express is going to go even further beginning by the end of the year. In late 2016, they will place important caps on the total number of chargebacks a merchant faces, placing the cap at 10 transactions per card. This means that after the first 10 chargebacks for fraudulent activity, the credit card issuer will become responsible rather than the merchant.

All good things must come to an end, and that includes American Express’s enlightened chargeback policy. They’re giving merchants only until April 2018 to enjoy these lightened liabilities. After that, if a merchant hasn’t upgraded his or her credit card processor to a chip-enabled system, they will once again become fully responsible for fraudulent charges. That is hopefully enough motivation for merchants who haven’t made the switch yet.

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Categories: American Express, Chargebacks, Chip Cards, EMV, Payment Processing

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