cestmoi123

Actually, the banks wanted to do it earlier, it was the merchants (who bear the cost of the new terminals) who were the delaying factor. It's only when the banks said that they'd stop absorbing fraud losses from swipe transactions that the ball actually started rolling.

josephstern

Since when have banks absorbed fraud losses from swipe transactions?

I know that's the typical line, but as a retailer, I've never had a bank absorb one of these. They always charge me back, claim it's fraud, and deduct the money from my account.

cestmoi123

I can't speak to your experience (are you talking about in-person transactions, or online use?), but I haven't found any information contradicting the statement that, in the case of in-person card fraud (where a signature was provided), that the bank takes the hit.

"When fraud occurs in a face-to-face transaction -- at a department store or gas station, for instance -- the issuing bank shoulders the loss."

http://www.wsj.com/articles/SB105173975140172900

josephstern

Online for me, generally.

I can't see behind the paywall at WSJ, but that article is from 2003, so I'm not inclined to take it too seriously.

Here's an article that argues both ways:

https://www.nerdwallet.com/blog/cred...it-card-fraud/

This Wikipedia article is also inconclusive:

https://en.wikipedia.org/wiki/Credit_card_fraud

Here's another WSJ (no paywall problem this time?):

http://www.wsj.com/articles/card-lia...ift-1443567562

Again, won't make a decision, but they do say "financial institutions absorbed the cost of certain fraudulent credit-and-debit card transactions." Emphasis mine.

But I do have over a decade of personal experience here. If my businesses have ever been charged-back due to fraud, we're done. Merchandise has been shipped to the 'customer' long ago and the financial institution pulls the money right back out of our account.

Now, the banks do still have costs here. They charge us generally $25 for the privilege of opening the investigation and taking our money, but it could cost them more than that in labor. And, of course, they have to swap out the true customer's card.

But they don't shoulder the heavy loss ever, in my experience.

cestmoi123

Online transactions are an entirely different kettle of fish, and EMV plays no role there, naturally. I was specifically talking about swipe (card present) transactions.

Also, from the very WSJ article you cite:

"The move from the old cards with the magnetic stripe on the back to the new ones with an embedded computer chip is aimed at reducing fraud with counterfeit cards. Historically, card issuers such as banks and credit unions covered those costs."

"Despite the new rules, card issuers will continue to bear the cost of fraud stemming from counterfeit cards that contain data stolen from nonchip cards."

josephstern

I'd love someone to post here with firsthand experience as a swipe vendor, because I truly believe that these articles are inconclusive. They don't cite any source or experience and, IMO, rely on repeating the lines the banks put out there to add reasoning as to why swipe fees are so high.

I'm glad to see, I don't believe I've had an in-person swipe fraud.

Further, if I'm bearing the cost of fraud for online transactions, but a swipe vendor doesn't bear the cost of fraud for in-person transactions, then why should my fees be significantly higher than an in-person vendor? Seems like it should be the reverse.

cestmoi123

If merchants had been bearing the costs of counterfeit cards used in swipe (i.e. card present transactions) already, then there wouldn't have been any issue in getting merchants to migrate to chip cards, since they would have done that on their own.

Don't you think it's significant that, when the banks announced that they'd no longer cover counterfeit card fraud on in person transactions, there are no articles pointing out that they weren't doing so anyway?

josephstern

This is all just circumstantial information. Don't you think it's significant that no bank says "we protect our merchants from fraudulent credit card transactions"?

cestmoi123

Not in the slightest. What we have is (a) wealth of articles stating that banks cover losses in the case of counterfeit credit cards that are physically presented, (b) no evidence that they don't do so, and (c) the fact that, if they didn't previously cover those losses, there would have been no policy to change when they ceased covering those losses.

So, let me ask you: can you point to a specific case where someone used a counterfeit card, in person, at your business, and you were held liable for the charge?

josephstern

Nope. Not a one.

Also, I've never had a person use a counterfeit card in person at my business.

So I don't think this data point will be very helpful.

BuBu4

Could it be something u purchased and the merchant has some weird name to it? I know it happens a lot. Heck, ATT shows up as like Midland or something like that, i couldnt figure it out until i googled around and found something.

It does sound like the merchant was able to prove the transaction was authentic by providing proof.

cestmoi123

So, you've got no reason whatsoever to believe that the situation published across multiple press outlets, and the only situation that would make the October change make ANY sense, isn't the actual situation?

josephstern

Except that no bank that I can find claims to indemnify swipe customers against fraud.

I'm not sure what field you're in, but I'm willing to bet that when you read press coverage of your field, you find it somewhat lacking.

TOMFORD

EMV isn't the magic bullet against fraud... someone can steal my credit card and swipe it even if it has a stack of EMVs on it. Chip and pin and not using your bday as the pin is the answer.

cestmoi123

See page 40 of the attached rules from Visa. Clearly shows that, in the event of a chargeback with a counterfeit card, providing proof that appropriate authorization was obtained (including a signature) will lift the liability.

"If the card was swiped and transaction was authorized at the point-of-sale, provide your acquirer with a copy of the printed transaction receipt."

https://usa.visa.com/dam/VCOM/downlo...-merchants.pdf