Have you noticed most credit cards now have a chip on them? This is because of the EMV Liability Shift established in 2015. This was the credit card networks’ way of preventing sellers like you from accidentally taking a counterfeit card at the point of sale, since the chip on a card can’t be copied the way a magnetic strip can be. In order for these security measures to work, all sellers should be processing chip cards using a chip card reader to prevent swiping or keying in a counterfeit card.

If you are not using a chip card reader and the cardholder later claims they did not authorize the payment, the bank now has the right to assume the card processed at the point of sale was counterfeit. Square no longer has the right to challenge these kind of disputes for you, and often they are automatically closed in favor of the cardholder. If you are not using a chip reader for payments taken in person, the banks see it as failure to follow best practices to prevent these kind of disputes. The liability of paying back cardholders has shifted from banks to sellers. This liability only applies to in-person payments.

Keying in payments through your mobile Square app?

If you’re keying in payment this way make sure you can answer YES to the following questions:

• Is my customer giving me this payment in person?
• Am I sure my customer is the owner of this card account?
• If something were to happen with the charge (e.g. it gets disputed) can I easily get in touch with my customer to resolve the issue?

Taking payments over the phone or via email?

If your customers are not present at the time of transaction, use the Virtual Terminal option on your Square Dashboard. You can access your Dashboard by logging on to squareup.com. Using Virtual Terminal allows Square to transmit the payment to the customer’s bank as a payment that was not processed in person. That way, if the cardholder disputes the charge because they don’t recognize the transaction, the bank can’t label the dispute as an EMV Liability Shift dispute.  

Quick Tips:

• Payments taken over the phone or via email should be entered using Virtual Terminal
• For manually entered payments, obtain a credit card authorization form or written authorization for the payment from the cardholder.
• In-person payments should be done using a chip card reader whenever possible.
• If you’re keying in a card number through the Square app on your mobile device, make sure you know your customer well so you can settle any dispute with them directly