Liability Shift

Question 1

Definition Liability Shift

Answer 1

The Liability Shift is a method by which the fraud liability of card transactions shifts from the merchant to the issuer, under certain conditions

Question 2

Conditions For Liability Shift

Answer 2

For the fraud liability to shift from the merchant to the Issuer, specific conditions must be satisfied, and these are summarized below:

• All EMV chip transactions are covered by the liability shift. This means that in the event of a dispute the fraud liability rests with the issuer and the merchant doesn’t incur any costs. This is a way of encouraging merchants to migrate from magnetic stripe to EMV- capable terminals
• Magnetic Stripe transactions are typically covered by the liability shift. In the US they removed it though, to encourage EMV usage.
• Contactless transactions are covered bu the liability shift
• E-Commerce transactions that have been authenticated using an approved version of 3D Secure are covered by the liability shift. As new versions of 3D Secure are released, card schemes may act to
  “encourage” merchants to migrate to new versions
• E-commerce transactions that have either (1) not been authenticated with 3D Secure, or (2) authenticated with a 3D Secure version that is no longer card-scheme-approved are not covered by the liability shift
• Mail order transactions are not covered by the liability shift
• Telephone order transactions are not covered bu the liability shift