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This article was published on: 10/31/17

ATM Chargebacks & Fallbacks in the New EMV Climate

Now that the full migration of EMV liability in the U.S. has finally hit, many ATM operators are concerned about the issues of fallback and chargeback – and the liability they may face. The ATM Industry Association (ATMIA) addressed this particular problem in a recent webinar titled “Post-Migration EMV Issues: Managing ATM Chargebacks and Fallbacks” where they spoke with representatives from Visa and the SHAZAM network…and announced a new insurance program designed to help protect ATM deployers.

Tom Rapkoch, director of risk products for VISA, noted that ATM fallback, while still higher than point-of-sale (POS), is seeing a steady decrease as EMV implementation continues at a rapid pace. In fact, ATM fallback has dropped from 7.34% in 2016 to 4.64%. A large portion of the current fallback can be attributed to the early stages of U.S. transition. Card networks continue to urge issuers to manage fallback risk rather than relying on fallback as a reason for decline.

ATMs operators should be aware that cash machines will be the first target of fraudsters once PIN information is acquired. ATM deployers should be sure they understand their areas of vulnerability and create a plan of action or take steps to protect themselves where they may be at risk of liability.

To help ATM deployers in their risk mitigation plans, ATMIA is working with Frates Insurance and Risk Management to offer a new, members-only insurance program specially designed for ATM operators. The coverage limitations will be up to $5,000 per incident and include fraudulent withdrawal chargebacks, EMV liability shift chargebacks, “Fallback” transactions and card brand chargeback fees.

“This is a unique program, built from the ground up for ATM owners and operators,” said ATMIA USA Executive Director for David Tente. “We are working out the final details of how the program will be administered. An announcement will be made as soon as we are ready to accept applications.”

While fallbacks and chargebacks appear to be on the decline, ATMs are still at a greater risk of fraudulent activity during this time of transition. Operators looking to protect themselves should contact their manufacturers and processors to see what options are in play and make plans to protect their business.

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