Since the October 1 liability shift, merchants across the country have rushed to adopt EMV-enabled payments systems. With this high rate of migration, the payments industry is observing an exorbitant rate of fallback transactions coming from newly deployed EMV terminals.

In these cases, chip cards presented at a chip terminal cannot be read due to technical issues with the chip. As a result, merchants are pressed to follow fallback acceptance procedures to ensure compliance with card acceptance rules. However, because these fallback procedures require merchants to revert to less secure transaction methods, such as magnetic stripe or key-entry, they must be especially careful when executing fallback purchases.

To navigate the proper fallback procedures, keep these best practices in mind the next time your EMV terminal will not read a chip card:

• If a chip card is presented at a magnetic stripe-only device, the device should always attempt to read the magnetic stripe first, with key-entry being a last resort. To keep your key-entry rates as low as possible, be sure to train your staff to properly follow the prompts on the terminal.
• Never force a fallback to magnetic stripe or key-entry, as these transactions are far more likely to result in authorization declines than for valid chip transactions.
• Always attempt to initiate card-present transactions with an electronic read. Electronically read data provides valuable risk management information to the issuer as well as appropriate protection to the merchant.
• Remember, the October 1 counterfeit fraud chip liability shift also affects key-entered transactions, as the liability remains with the party that has not invested in chip technology.
• However, if the chip itself is damaged (Some fraudsters may create counterfeit cards with intentionally damaged chips specifically to invoke fallback procedures.), the card issuer holds liability. Because of this, it may choose to decline them when sent for authorization as a failsafe.

Vantage has several EMV terminal solutions to choose from. Visit our website to learn more about our payment technology services and solutions!