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Mastercard 4870 - Chip Liability Shift

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TL;DR
  • A counterfeit chip card ran and the chip never got read. The loss lands on whoever skipped EMV.
  • Chip records and PIN verification can support a defense. They don't guarantee the outcome
  • Follow your processor's certified fallback steps and preserve the authorization and clearing data
  • Check the filing condition and regional rule. Use your notice's response date
  • Track fallback by terminal. Investigate a rise against its own baseline

Got this code?​

Your deadline: The date on your notice wins. Ask your processor if it isn't clear: the network's issuer filing window isn't your response deadline.

The claim: A counterfeit EMV chip card ran at a terminal that didn't process the chip properly. Liability shifts to your acquirer, and your acquirer passes it to you.

Records that answer it:

  1. The EMV cryptogram and chip data in the authorization
  2. The PIN verification indicator, if a PIN was entered
  3. Terminal logs showing chip attempts before any fallback

Next: Decide whether it's worth fighting, then fill in the response outline for this claim and follow the Representment Workflow.

When This Code Applies​

  • Counterfeit chip card transaction
  • Terminal didn't process chip (fallback to swipe)
  • Chip malfunction with improper fallback handling
  • Terminal not EMV-capable when chip card presented

Liability Shift Rules​

Liability Shifts TO Merchant When:​

ScenarioLiability
Chip card + non-chip terminalMerchant
Chip card + fallback to swipe (improper)Merchant
Chip card + manual entryMerchant
Chip malfunction + no chip attemptMerchant

Liability Stays WITH Issuer When:​

ScenarioLiability
Chip card + chip read + PIN verifiedIssuer
Chip malfunction + documented fallbackConfirm the transaction coding and applicable regional rule
Non-chip card at any terminalIssuer
Online PIN verifiedIssuer

Chip Fallback Requirements​

When the chip won't read, you must:

  1. Follow the certified chip-read steps - Ask your processor what its terminal requires and log failures
  2. Use fallback only after failed attempts - It isn't your first move
  3. Indicate fallback in authorization - Proper coding
  4. Document the technical issue - Terminal logs

Time Frames​

RegionChargeback Window
StandardConfirm the chip-liability condition and start event
Europe ATM/MaestroConfirm the product and regional rule

Use the response date on your notice. The network's issuer filing window isn't your merchant response deadline. Ask your acquirer for the current condition, regional rule and edition before relying on a filing-window summary.

Representment Options​

Valid Defenses​

  1. Chip was properly read - Transaction was EMV chip-read
  2. PIN verified online - Cardholder entered correct PIN
  3. Technical fallback documented - Proper chip failure handling
  4. Non-chip card - Card didn't have chip capability
  5. Refund issued - Transaction already credited

Evidence Required​

DefenseDocumentation
Chip readEMV cryptogram, chip data in auth
PIN verifiedPIN verification indicator
FallbackTerminal logs showing chip attempts
Non-chip cardCard verification showing no chip

Message Text Requirements​

When representing, include appropriate text in DE 72:

DefenseMessage Text
Chip readCHIP READ
PIN verifiedPIN VERIFIED
Proper fallbackTECH FALLBACK

Second Presentment Time Frames​

RegionWindow
Standard45 calendar days
Costa Rica10 calendar days
Kazakhstan30 calendar days
Nigeria2 business days
Tanzania20 calendar days

Technical Requirements​

EMV Data Elements​

Authorization must include:

  • DE 55: EMV chip data
  • DE 22: POS entry mode (chip read indicator)
  • DE 23: Card sequence number (if applicable)

Terminal Requirements​

  • Certified EMV terminal
  • Current chip key certifications
  • Proper fallback configuration
  • Transaction logging enabled

Which defenses hold up​

ScenarioHow it holds up
Chip + PIN verifiedStrongest
Documented fallbackWeaker
No chip read, no fallback documentationRarely wins

Track your own win rate by reason code instead of relying on a general figure.

  • 4871 - Chip Lost/Stolen/NRI
  • 4837 - No Cardholder Authorization

Prevention Strategies​

Terminal Management​

  1. Ensure EMV certification - All terminals certified
  2. Regular maintenance - Keep chip readers clean and functional
  3. Software updates - Current terminal software
  4. Staff training - Proper chip card handling

Transaction Processing​

  1. Always attempt chip - Never skip to swipe
  2. Document failures - Log chip read errors
  3. Follow fallback procedures - As defined by network
  4. Review exception reports - Monitor fallback rates

Monitoring​

  1. Track fallback rate - Compare each terminal with its own baseline; investigate a change
  2. Terminal health checks - Regular testing
  3. Alert on anomalies - Fallbacks shouldn't spike overnight
  4. Root cause analysis - Investigate chip failures

See Also​

Something wrong on this page? Email matt at paymentsandrisk.com and say what needs fixing.