The EMV liability shift is a rule established by the major card networks to encourage merchants to adopt EMV-enabled payment terminals, which are more secure than traditional magnetic stripe payment terminals.
Before the EMV liability shift, the issuing bank was responsible for, and bore the cost of, fraudulent transactions, regardless of whether the merchant was using EMV-enabled payment terminals or not.
However, with the EMV liability shift, if a merchant is not using an EMV-enabled payment terminal and a fraudulent transaction occurs, the merchant is responsible for the cost of the transaction.
While there was some initial resistance by merchants to the EMV liability shift due to the cost of upgrading payment terminals, most merchants have now adopted the technology to avoid the risk of financial liability for fraudulent transactions. This, in turn, has resulted in a reduction in fraud, and an increase in payment security.
