Consumers who use debit and credit cards may have recently noticed that their cards look a little bit different. Many companies are now issuing cards with a card chip on the front, which is known as the Europay, MasterCard, and Visa (EMV). There is good reason many card issuers are using this new technology: Congressional legislation has shifted the burden of fraud liability.
This is in an attempt to crack down on fraud, especially those crimes committed at card terminals inside retail stores. In 2015, it is estimated that liability will total more than $10 billion in the United States. The new compliance regulations go into effect October 2015. However, it is not mandatory that card issuers use the EMV technology.
Once the liability shift goes into effect:
- If a merchant is still using the “swipe and signature” methodology and the customer has a smartcard, the merchant is liable.
- If the merchant has the new Chip and PIN technology but the bank hasn’t issued the customer a Chip and PIN card, the bank is liable.
- If the merchant uses Chip and PIN technology on a customer’s smartcard and fraud still takes place, the credit card company bears the liability, as is the case today.
How does this affect DataPath customers?
Many of DataPath’s cards and services are auto-substantiated and purchases are verified at the point-of-service. This means that qualified expenses for FSAs and HSAs, and at doctors’ offices or other verified merchants, are authenticated when those items and services are purchased. These and other security measures greatly reduce the chance for fraud and abuse. To date in 2015, DataPath has experienced a fraud rate of only 0.0009%. Due to this exceptionally low fraud rate, customers with a mySourceCard, Summit, or RenewCard will not need to be issued new cards.
Fraud prevention and secure banking transactions are of utmost importance. DataPath is highly confident in its current security measures and fraudulent detection technologies and will continue to stay on the forefront of fraud prevention measures.