x

Do you know if you allow a customer to swipe a card with a chip you can get a charge back?

Square notified me that a charge back was applied to my account and the money was taken by Square from my bank account. The reason Square explains is if a card has a chip it must go into the chip reader. If a card with a chip is swiped, by law, the customer or the bank has the right to award you a charge back. Square's solution to me was to invest in a chip reader. Unfortunately, I already have a chip reader but did not know a customer could or would do this to me. I also did not know Square condones this behavior and does not require cards to remove the stripe on cards that allow this criminal activity to occur. My suggestion is to never allow swiping. 

1,715 Views
Message 1 of 4
Report
3 REPLIES 3
Super Seller

yes, the liability shift happened a few years ago when the credit card issuing companies (Chase, etc) decided that the weakest link in the chain would be liable for the fraudulent charge.  here are a few links about the liability shift.  

https://squareup.com/emv-liability-shift

https://squareup.com/guides/liability-shift

https://squareup.com/townsquare/6-myths-about-the-liability-shift

https://squareup.com/townsquare/which-types-of-fraud-apply-to-the-liability-shift-an-explainer

 

you can set in the app if you allow chip cards to be swiped.  also if a chip card can't be read after 3 tries you can swipe it and still be protected.  Square doesn't make the credit cards for the hundreds of credit card issuing banks so it's not that they are condoning it at all, magnetic swipe is going away but it is going to take time.

 

thankfully Square has the fastest in the business chip reader that usually gets a chip transaction done in under 3 seconds, and the reader is only $49 which is a bargain in the credit card processing machine industry.

 

basically, always dip, or take tap payments unless the card can only be swiped or the chip can't be read.

1,705 Views
Message 2 of 4
Report

Found this out a few days ago when I had a charge back of $28.  I have the signed receipt and what she ordered but because it was swiped I couldn't do anything about it.  The customer even gave $3 tip on her order and dined in but none of that matter even if I have signed receipt.  I can't even dispute it.  I think consumers just found loophole to this system that is supposed to protect both the customer and the merchant.  Learned my lesson and I now have the chip reader.  I don't know what I will do with the trays that need to be prepaid.  Sometimes we take payments over the phone.  I'll need to stop that or risk having charge back but at the same time, that could be a loss sale if I don't grab the opportunity to close the deal at that moment.   

1,618 Views
Message 3 of 4
Report
Admin

@Gam1

 

The liability shift is a change in how banks and processing networks handle certain types of credit card fraud. As of October 1, 2015, businesses that aren’t set up to accept chip cards can now be on the hook for certain types of fraudulent transactions.

 

The liability shift only applies to in-person fraud with an EMV card on a non-EMV card reader. For the payments you take over the phone, we'd suggest using a service like Square Invoices. This does help protect you, although taking payment over the phone is protected by the normal disputes process.

 

For more information on EMV liability this might be helpful https://squareup.com/guides/liability-shift

kellyj
Technical Program Manager: AI
Square Inc
1,581 Views
Message 4 of 4
Report