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Mastercard 4870 - Chip Liability Shift

TL;DR
  • A counterfeit chip card ran and the chip never got read. The loss lands on whoever skipped EMV.
  • Chip read plus a verified PIN wins this outright. Expect 85-95%.
  • Two logged chip attempts before any swipe fallback. That's the line between a defense and a loss.
  • Chargeback window: 90 calendar days from settlement. You get 45 days to respond.
  • Keep your fallback rate under 5%. Above that, a terminal is broken.

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.

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 + multiple chip attemptsIssuer
Non-chip card at any terminalIssuer
Online PIN verifiedIssuer

Chip Fallback Requirements​

When the chip won't read, you must:

  1. Attempt chip read at least twice - Document attempts
  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
Standard90 calendar days from settlement
Europe ATM/Maestro120 calendar days

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

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 - Should be under 5%
  2. Terminal health checks - Regular testing
  3. Alert on anomalies - Fallbacks shouldn't spike overnight
  4. Root cause analysis - Investigate chip failures

Win Rate Expectations​

ScenarioExpected Win Rate
Chip + PIN verified85-95%
Documented fallback40-60%
No chip read, no fallback documentationUnder 10%
  • 4871 - Chip Lost/Stolen/NRI
  • 4837 - No Cardholder Authorization

See Also​

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