New rules for retailer credit card fraud are slated to go into effect on October 1, representing the first major sea change in credit fraud liability in years. But what do merchants need to know to make sure that they're ready for this change?

According to the financial news website The Street, come this October, U.S. retailers looking to better manage risk after a new shift in fraud liability will need terminals compliant with Europay-MasterCard-Visa (EMV) "smart cards," which are designed to better curb instances of counterfeiting. This shift in determining where liability lies if fraud occurs is just one step in a much larger process of pushing for a more widespread of EMV throughout the U.S.

While card issuers — predominantly banks — used to have to bear the costs of counterfeit credit cards, the new rules on October 1 will now shift that responsibility onto the merchants themselves in certain circumstances. Following that deadline, should a cardholder with an EMV-chip card make a card-present, face-to-face transaction at an EMV terminal, then the card issuer will continue to hold the responsibility in the event of fraud. However, if an EMV card is used at a terminal that is not EMV ready, then the potential consequences of a fraudulent card-present transaction will be thrust onto the merchant instead.

Although this liability shift is designed as an incentive for both cardholders and merchants to adopt EMV cards and terminals, respectively, cardholders without an EMV chip in their preferred charge cards will still be able to shop and pay as normal after October 1. The new rule will allow both chip and mag stripe cards alike to be used for transactions.

However, both merchants and card issuers still have a long way to go in meeting this goal, and according to one consulting firm, neither one will likely make the deadline. The firm estimates that card issuers are only on track for issuing 70 percent of credit cards and 41 percent of debits with EMV chips installed before the year is out. On the other side of that equation, only about 59 percent of merchants are expected to have EMV-capable terminals installed by year's end. Based on these projections, neither card issuers or merchants are anticipated to be fully EMV compliant before 2015 closes, let alone by October 1 — a fact that casts some doubt on whether or not this deadline will hold at all.

Of course, October is still a ways off.   Be sure to stay tuned with our blog in the meantime for further updates as this story continues to develop and as Vantage announces EMV options that become available to meet your needs.