For many years, the merchants were held liable for different e-commerce chargebacks because of frauds. Today, the authentication is bringing the positive benefits that come with liability shift. So what exactly is liability shift?

Now it means that the liability which comes from chargeback loss is shifting from the merchant back to the bank, for those e-commerce transactions where the holder of the card denies making a transaction, or for fraudulent transactions. The card issuing bank can no longer pass the chargebacks to the merchant.

Most of the credit cards today are equipped with EMV chip technology, which is the abbreviation of Europay – MasterCard – Visa. This standard describes the transaction that goes between the credit card and the terminal. This standard gets widely implemented today because it is much safer than the outdated magnetic stripe credit card transaction.

If you are a merchant, you are probably asking yourself how EMV can help your business. Well, first of all, the card authentication is more robust in protection against counterfeited credit cards.

Second, there are much less chargebacks that are related to fraud from stolen credit cards; third, there is cardholder verification as a way of protection against stolen or lost cards, and fourth, it gives bigger peace of mind to the customers.

It has changed in a way that starting from the date when you are enabled for card authentication – you are no longer held liable for some fraud-related chargebacks when the cardholder is denying that he or she have done any purchase. That means you should see a significant reduce in the number of fraudulent chargebacks.

Liability shift depends on many factors, such as credit card type, merchant and card issuing countries, and the authentication result. For example, transactions that involved personal debit or credit cards – Visa and MasterCard are offering worldwide protection for non-enrolled issuing banks and cardholders.