July 22 is TVIF –Thank Visa It’s Friday – for non-EMV compliant merchants, especially small merchants and the payment facilitators who target them. That day Visa will ease the burden on merchants not yet compliant with EMV hardware and/or certification of that hardware by blocking all U.S. counterfeit fraud chargebacks under $25 until April 2018.
It’s a big deal that the giant brand is paying attention to the little guys, who not only win financially but also save time and headaches involved with chargebacks.
“I would think smaller merchants would benefit because a higher percentage of their sales are under 25 dollars and dollars mean a lot more to them,” said Ray Pucci, Associate Director of Research Services for Mercator Advisory Group. “Small merchants have lower sales, so any chargeback to them is a relatively serious matter. Small merchants will be the biggest benefactors in my opinion.”
Vantiv’s general manager of PayFacs Chuck Danner said July 22 should pass without incident for PayFacs.
“As it relates to PayFac, it will be business as usual,” Danner said. “Visa controls the chargebacks coming through, so if the chargebacks meet either of the thresholds set by Visa, they will not be passed through to the PayFac.”
MasterCard spokesperson Beth Kitchener said her company hasn’t set a policy similar to Visa’s, content to let its feedback from issuers and policies already in place ease any pain felt by merchants. She noted MasterCard established its Fraud Notification Service in 2011, a global program that covers all types of fraud both in store and online.
“MasterCard is not systematically blocking chargebacks under $25; our data demonstrates that issuers are not actively submitting chargebacks under this threshold given the operational costs of low-dollar value chargebacks,” she said. “MasterCard does have systematic blocks in place to ensure invalid chargebacks are not submitted, for example, ATM or automatic fuel dispenser chargebacks, as these liability shifts don’t take effect until October 2016 and 2017, respectively.”
MasterCard, Visa and American Express have responded to the slow uptake of EMV-certified merchants by decreasing the transaction time required by chip cards at the POS. MasterCard and Visa have pledged also to decrease the time certification takes from months to weeks by funding value added resellers’ efforts to help with certification and giving acquirers flexibility in choosing tests and methods. Visa estimated its efforts could result in an 80 percent drop in certification time.
According to a report in Business Insider during the mid-to-late June flurry of card brand mitigation announcements:
“MasterCard’s role in the certification process could make these changes particularly influential. The MasterCard certification process is the most comprehensive and involved of all the card networks, Creditcall CTO/CSO Jeremy Gumbley told BI Intelligence. As a result, other card brands rely on the results of MasterCard’s tests in order to certify terminals. But MasterCard plans to reduce its number of tests involved in certifying by 58%, which would speed up the most robust process and reduce the wait time for other stakeholders down the value chain. That has the potential to drastically shorten the certification process, which could help the migration scale relatively quickly.”
American Express will mimic Visa’s July 22 policy, but in late August. Amex also will copy Visa’s policy to limit the number of counterfeit fraud chargebacks to a total of 10 per card account — the card issuer will bear the financial liability for any additional counterfeit fraud transaction that is disputed on a card account after 10 chargebacks. But Visa’s will begin in October, while Amex announced its action would begin at the end of 2016.