Starting July 22, credit unions and other card issuers may find themselves picking up some of the tab for merchants that still haven't migrated to EMV.
On that day, Visa will begin blocking all U.S. counterfeit fraud chargebacks of less than $25. American Express has said it will follow suit with a similar policy by the end of August.
"These smaller chargebacks generate a great deal of work and expense for merchants and acquirers, with limited financial impact for issuing banks," Visa said in a statement. A chargeback is a card issuer demand for a retailer to cover a loss from a fraudulent or disputed transaction.
Also, in October, Visa will begin limiting card issuers to just 10 chargebacks per account for fraudulent counterfeit transactions. After 10 chargebacks, card issuers will be on the hook for any fraudulent counterfeit transactions on the account. American Express said it will implement similar rules by the end of the year.
The blocks will stay in effect until April 2018.
Visa said implementing the $25 threshold and 10-chargeback limit should cut down on the number of counterfeit chargebacks merchants see by 40% and the dollar amount of counterfeit chargebacks to merchants by 15%.
American Express said more than 40% of its counterfeit fraud chargebacks in the U.S. are for transactions under $25.
Most retailers still have not switched to EMV, though many plan to do it soon, according to a survey performed in May and June by the National Retail Federation. The NRF found 48% of retailers have implemented EMV technology or expected to do so by the end of June. A full 86% said they plan to have EMV available by the end of 2016.
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