The sluggish changeover to chip credit cards by U.S. retailers hasn’t gone unnoticed by criminals. It’s estimated that counterfeit-card fraud will rise to $4.5 billion in 2016, up 12.5% from last year, according to researcher Aite Group, as cybercrooks increase their efforts before all merchants and banks comply with the more secure technology.
In view of this, Visa said it is simplifying its equipment-certification process and changing its chargeback policies to reduce liability faced by merchants, including vending operators, who haven’t yet moved to accept chip cards. Effective July 22, Visa will block all U.S. counterfeit-card fraud chargebacks under $25. And starting in October, it will allow banks to charge back only 10 counterfeit transactions per account, and will require them to assume liability for all transactions thereafter. The blocks will remain through April 2018.
These two changes will significantly reduce the number of chargebacks that merchants are seeing, Visa predicted. Following these changes, Visa claims merchants can expect to see 40% fewer counterfeit chargebacks, and a 15% reduction in U.S. counterfeit fraud dollars being charged back. The policy updates are also designed to reinforce the issuer’s responsibility to detect quickly and act upon counterfeit fraud.
The National Automatic Merchandising Association said Visa’s new policy will alleviate the impact that fraudulent charges have on vending operators, who previously were bearing the cost.