Following a similar move from Visa last week, MasterCard is streamlining EMV certification and will adjust its fraud-cost policy for non-EMV compatible merchants.
MasterCard says it has cut the number of needed EMV tests by 58%, minimizing mandatory tests and allowing acquirers to use their discretion and expertise in deciding when terminals are ready for deployment. In another move that gives more authority to acquirers, MasterCard is allowing flexibility for alternative testing processes and tools to speed certification.
Value-added resellers also will receive more resources to help navigate terminal configurations and test processes.
A major concern for the past two years in the U.S. conversion to EMV chip cards has been the probability that certification testing would create a logjam, particularly for those who waited longer to pursue an EMV upgrade.
The liability shift for the EMV migration took place in October of 2015, making the party unable to issue or accept EMV chip cards liable for counterfeit fraud at the point of sale.
"I can't quote a specific time frame we are seeing for certification testing, because there are so many variables, depending on the merchant, acquirer and type of system in place," said Chiro Aikat, senior vice president for product delivery-EMV for MasterCard. "With these changes, we do believe we can see a significant reduction in certification time periods."
MasterCard will continue to monitor its rules related to limiting exposure to excessive chargebacks from a fraudulent account, Aikat said.
Because MasterCard has had a policy in place to limit chargebacks across all channels, the company will determine in the near future what type of adjustment it might make for merchants not yet accepting EMV cards.
In its announcement, Visa established a threshold of 10 chargebacks per counterfeit fraud card account, saying it would reinforce the issuer's role in identifying and blocking those cards quickly, while limiting chargeback exposure to merchants.
"We have had a more holistic approach in including face-to-face and card-not-present fraud, so what we are saying now is if there are a lot of chargebacks from a particular account, there will be a time and place where those chargebacks get blocked," Aikat said. "We will say the issuer cannot do more chargebacks and has to a issue a new account number."
Calling it a new development for MasterCard, Aikat said the card brand will increase the amount of intelligence it adds to its network related to chargebacks to ensure that chargebacks not related to the EMV liability shift are not going back to a merchant to begin with.
"We have introduced some checks and balances so that if an issuer approves a contactless payment, that should not go back to the merchant, or if a fraudulent transaction occurs on a technical fallback [using mag-stripe when EMV is available], that should not go back to the merchant," Aikat said.
In addition, the card brand has to make sure that fraudulent transactions at fuel pumps or ATMs are not charged back to a merchant, because a liability shift for those payment forms does not take hold until 2017.
Through its development of M/Chip Fast to speed up chip transaction times at the point of sale, and easing fraud costs to merchants, MasterCard is "keenly focused on a goal of driving counterfeit card fraud out of the U.S,” Aikat said.
“The purpose of the EMV transition is to create more layers of security and to help drive card fraud out of the U.S.," Guy Harris, president of payment processor Elavon North America, said in a media statement. "Elavon has been working with MasterCard and our merchant customers for over three years to develop strategies, implement hardware and software upgrades and train employees. By accelerating the testing and certification process, MasterCard and Elavon can make more terminals available to more merchants, increasing the safety of the entire payments ecosystem.”
MasterCard recently announced that almost 70% of all U.S.-issued MasterCard branded consumer credit cards are now chip cards, a 58% increase in chip cards in market since the Oct. 1, 2015 liability shift. Chip-active merchant locations have also increased to 1.4 million, up 240% since October 1. This number includes 1 million chip-active local and regional merchants, a 170% increase since the liability shift.
The U.S. market is so large and merchants have faced many complex issues in getting through EMV testing and certification, causing unwanted delays, Randy Vanderhoof, president of the EMV Migration Forum, stated in an e-mail.
"With these announcements, we’re seeing some flexibility by the brands to refine processes around development and certification to address the merchant migration," Vanderhoof added. "This will provide some relief for retailers struggling with migration costs associated with equipment and certification as well as dealing with chargebacks."