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Visa Eliminating Fallback Transactions

Visa Eliminating Fallback Transactions

In a continuing effort to provide timely and helpful information to the Dream Payments community, we are focusing today’s blog on a change that Visa is making to fallback transactions starting in mid-October.

Fallback transactions occur when a Visa chip card can’t be read by a point-of-sale (POS) terminal due to a technical issue with the chip. When the chip can’t be read, the technology “falls back” to a magnetic stripe transaction. This situation occurs infrequently because EMV chips, a key security layer that has helped to significantly reduce card-present fraud, rarely fail. However, in some situations, a fraudster may create a counterfeit card with an intentionally damaged chip to deliberately invoke just such a scenario. As a result, Visa has announced a change to further protect transactions in the card-present space.

So, what is changing and what does this change mean for merchants?

Beginning October 14, 2017, if a Canadian-issued Visa chip card does not work at a domestic chip-enabled terminal and the merchant swipes the magnetic stripe in an attempt to process the transaction, it will be declined.

"It's very rare that a chip doesn't work, and if a customer has to swipe their card, you will often see some discomfort on their face,” a cashier at a busy downtown Toronto retailer told Dream. “Often, they want to provide a different card instead because swiping for Canadian consumers is very unnatural now that we have secure chip technology."

If a chip card is declined because of a fallback transaction, Visa says merchants should ask for another form of payment.

Certain Visa cards in Canada that are magnetic stripe only, such as prepaid or gift cards, will continue to be processed by swiping the magnetic stripe. Visa cards that are issued outside of Canada and used here may still be processed as a magnetic stripe transaction, however this is subject to the approval of the issuer.

Learn more in Visa’s “Canada Payment Security Roadmap: No Fallback” fact sheet.

As always, your business is safe with Dream Payments. Learn more about our security and privacy features on our solutions page.