What Happens When...

What happens if I get a chip card from outside of Canada?

All EMV transactions, irrespective of card issuing country, follow a standard process according to configurable risk parameters defined by your acquirer.

What happens if a U.S. VISA cardholder visits Canada after merchants migrate to chip and PIN terminals?

When a Visa card is inserted into an EMV-compliant terminal, the terminal will prompt the cardholder for an authentication method. If the card presented is U.S.-issued, the card may or may not have a chip. If the card only has a magnetic stripe, a signature will be requested. If a chip card is presented, the terminal may request either a PIN or a signature. In all cases, U.S. cardholders will be able to make purchases easily with their Visa cards in Canada.

What if we get fraudulent cards from the US?

The fraud liability under chip and PIN lies with the non-chip party. However the liability shift for Canada on Visa is not until October 2010. Chargeback processing will still apply where applicable. Copied chip cards from around the world do exist as magnetic stripe cards and usually target countries not accepting chip and who still provide floor limits in retail stores.

My business deals with a number of tourists. Will foreign debit cards work at these new terminals?

All existing magnetic stripe based cards that were previously accepted will continue to work. Foreign tourist chip cards will fall into two categories as noted above – where it is internationally recognized it will work as a chip transaction, otherwise as magnetic stripe. Eg Geldkarte in Germany is country specific chip.

What happens if we don’t convert?

Eventually, a combination of issues will likely occur:

  • Customer trust will decline and they seek out chip accepting merchants
  • Post the liability shift, you would be responsible for any fraud, where the card was originally chip based
  • Likely to incur future increases in merchant service fees or
  • Be declined from accepting card payments
What happens when the power is out?

If the power is out then the merchant terminal will not work to authenticate the chip and PIN and ask for authorization from the issuer. In this case, if the merchants decides to write out a paper slip they accept the risk.

Fall back rules will continue to apply where applicable.

Are there any rules regarding the placement of pin pads in relation to the customer?

None other than security should be a consideration including limiting the ability to shoulder surf the Customer.

Are we liable for fraud if the chip doesn’t work and the cashier uses the stripe?

In Canada, Visa has mandated a liability shift that will require Canadian retailers to absorb fraud cost if they accept magnetic-stripe cards instead of chip & PIN cards after 2010. Interac will have its own requirements in 2015.

When retailers become responsible for the fraud, can we refuse to accept mag-stripe cards?
  • The earliest liability shift noted is October 2010 for Visa. If you are chip enabled, then you would be covered for this situation. If you refuse to transact magnetic stripe cards for international payments, you will be firstly losing a sale.
  • Magnetic stripe is still a valid card and will continue to be for international interoperability. Domestic mandates have been documented for Interac in 2012 & 2015
  • If you are suspicious of fraud, you should act accordingly once verifying the identity of the cardholder
How do chip cards impact chargebacks?

In a mature chip on chip market with PIN, these should decline and increasingly become partially automated. During the transition period, any available liability shift will change who is responsible for the fraud based on who supported chip.