Bass, Berry & Sims attorney Tony McFarland provided insight on the transition to chip card technology that merchants will be under pressure to adopt by October 1, 2015 or face liability for fraudulent payment transactions. Historically, the liability burden for these transactions rested on the credit card companies. Tony commented on this switch, saying "The costs for fraudulent transactions have generally fallen on the card issuers, like Visa and MasterCard, rather than the retailers accepting those cards. After October of this year, however, for everyone except fuel-selling merchants, Visa and MasterCard have announced they plan to push those costs back on the retailers. Even before the retailer suffers an actual loss of business, the threat of paying for the consequences of the counterfeiting will loom overhead."
The article further explores the benefits of the new chip technology and how the switch will affect retailers. According to Tony, small retailers "need to weigh the advantage of the business need to use payment cards with the cost of purchasing and implementing the updated technology, as well as the potential loss of business, and reputational damage if they don't change, all of which can be significant."
The full article, "How Companies Are Preparing for the Imminent Liability Shift for Counterfeit Credit Cards," was published by The Cybersecurity Law Report on June 3 and is available online (subscription required).