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EMV Reason Code 70 Chargebacks Can Affect Your Bottom Line

As of October 21, 2016, ATM owners/operators became financially liable for valid EMV Code 70 counterfeit fraud chargebacks on all Mastercard branded ATM transactions.  Previously, ATM owners/operators were only held liable for counterfeit cross-border Maestro transactions, which were less than 4% of the total MC transactions made at ATM’s supported by PAI.  This year in October, Visa will be the next network to defer liability for counterfeit transactions to ATM owners/operators via EMV “Code 70” reason codes.

A Visa/MC “Reason Code 70” is described as follows: The issuing bank received a transaction that was below the merchant’s floor limit and the account number was listed on Visa’s Exception File maybe because the merchant either did not check the Exception File or received a negative response. The most common cause is when a merchant processes a transaction below its floor limit without making sure that the exception file had been checked. The exception file is a list of lost, stolen, counterfeit, fraudulent, or otherwise invalid account numbers kept by individual merchants or their third-party processors. The exception file should be checked as part of the authorization process, particularly for transactions that are below a merchant’s floor limit. The exception file should be automatically checked when a card is swiped. Floor limits are typically specified in merchant agreements. Floor limits are zero for all card-not-present transactions: they always require authorization regardless of the dollar amount of the transaction.

What this means is that now networks and processors that flag suspicious and/or fraudulent card activity via EMV “Reason Code 70’s” will charge ATM owners/operators new fees along with the costs of charging back the amount of the transaction.  These fees could end up affecting your bottom line.  PAI estimates that their market partners have paid more than $100,000 in “Reason Code 70” fees since the October 2016 MC deadline.  With the Visa October 2017 deadline looming in the distance, it really makes sense to get your ATM upgraded for EMV as soon as possible.  The small cost associated with the EMV upgrade will save ATM owners/operators a significant amount of expense down the road, and completely eliminate any exposure to the future liability of fraudulent ATM transactions.

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