How to Prevent Fraud and Chargebacks with EMV Terminals

Preventing fraud and chargebacks with EMV terminals is no longer optional for U.S. businesses. It’s a core part of protecting revenue, keeping processing costs down, and staying competitive in a card-first economy. 

In this guide, you’ll learn exactly how EMV terminals work, how they reduce fraud and chargebacks, and what you should do step-by-step to tighten your defenses at the point of sale.

What Is EMV and Why It Matters for Fraud and Chargeback Prevention

EMV stands for Europay, Mastercard, and Visa, the global standard for chip-based card payments. EMV cards contain an embedded microchip that generates a unique, one-time cryptogram for every transaction, unlike magnetic stripe cards that use static, reusable data. 

That dynamic data makes it extremely difficult for criminals to clone or reuse card details in card-present transactions.

In the United States, full migration to EMV technology took off after the EMV liability shift in October 2015, when major card brands changed the rules so that the party using the less secure technology—typically the merchant without EMV terminals—became liable for certain types of card-present fraud. 

Today, more than 90% of U.S. card-present transactions are processed using EMV chip technology, which shows how central EMV terminals have become to everyday commerce.

For merchants, this matters because counterfeit card fraud has dropped dramatically where chip cards and EMV terminals are widely used. Studies and network data show reductions of 70%+ in counterfeit card-present fraud after EMV adoption. 

By using certified EMV terminals correctly, you not only reduce the risk of fraudulent transactions, but you also strengthen your position when a dispute turns into a chargeback claim.

However, EMV terminals are not a magic shield. They specifically target counterfeit and some lost-or-stolen fraud at the physical point of sale. They do not automatically protect against friendly fraud, service disputes, or all forms of card-present scams. 

To truly prevent fraud and chargebacks with EMV terminals, you must combine the technology with strong configuration, staff training, and smart dispute processes.

How EMV Terminals Reduce Card-Present Fraud in the U.S.

Dynamic Authentication and Cryptograms

The biggest reason EMV terminals reduce fraud is dynamic authentication. When a customer inserts or taps their EMV card, the chip and the terminal work together to generate a one-time transaction code (cryptogram). Even if a criminal intercepts the data, that code cannot be reused to make another transaction.

With legacy magstripe cards, card data is static. Skimmers at gas pumps, ATMs, or compromised POS systems can capture track data and clone cards easily. 

That cloned card can be swiped anywhere that still allows magstripe, often resulting in counterfeit fraud and chargebacks. EMV terminals break that model because the chip transaction can’t be cloned in the same way.

From a chargeback perspective, the EMV authorization data becomes important. When you process the transaction through EMV terminals, your acquirer and the issuing bank can see that a chip-read transaction occurred, with valid EMV data. 

That makes it much harder for a cardholder to claim the card was never present or that the card was counterfeit. In many scenarios, the liability for those fraud claims shifts away from the merchant, as long as EMV was correctly used and your terminal was up to date.

Reducing Counterfeit and Lost-or-Stolen Fraud at the POS

EMV terminals are particularly effective against counterfeit card fraud, because cloning chip data is significantly more complex than cloning a magstripe. According to industry and central bank research, counterfeit card-present fraud has fallen sharply in environments where EMV is fully deployed.

However, fraud has not disappeared. Fraudsters adapt by:

• Targeting terminals that still allow fallback magstripe swipes, which can be skimmed and cloned.
  
• Exploiting lost-or-stolen cards where no PIN or strong cardholder verification is required.
  
• Shifting to card-not-present (CNP) fraud online, where EMV terminals are not involved at all.

To prevent fraud and chargebacks with EMV terminals, merchants should minimize magstripe fallback, enforce strong cardholder verification (like PIN where supported), and pair EMV terminals with tools that address online and remote transactions.

Understanding the EMV Liability Shift and Its Impact on Chargebacks

Who Is Liable When Fraud Happens?

The EMV liability shift fundamentally changed who pays for certain kinds of fraud. Before EMV, issuers generally bore the cost of card-present counterfeit fraud. After the shift, liability is typically assigned to the party that did not adopt EMV chip technology.

In practical terms, here’s what this means for a U.S. merchant:

• If the customer presents an EMV chip card, but you swipe the magstripe on a non-EMV-capable POS or bypass the chip, and the transaction turns out to be counterfeit, you are usually liable for the resulting chargeback.
  
• If you use EMV terminals correctly, and the transaction is processed as a chip read, the issuer generally retains liability for certain counterfeit or lost-or-stolen fraud scenarios, subject to card network rules.
  
• The liability shift rules do not typically cover card-not-present transactions, so online or keyed-in payments still follow the older liability framework.

Understanding these rules is crucial. Many merchants assume that simply owning EMV terminals is enough. In reality, to prevent fraud and chargebacks with EMV terminals, you must actually process the transaction using the chip or contactless EMV and follow network guidelines. 

If your staff habitually swipes chip cards “because it’s faster,” you may be exposing your business to unnecessary chargeback liability.

Why EMV Alone Won’t Eliminate Chargebacks

Even with EMV terminals, you will still face chargebacks. That’s because many disputes are not about counterfeit cards. They may involve:

• Customer service issues (item not received, wrong item, quality disputes).
  
• Processing errors (duplicate charges, incorrect amounts).
  
• Friendly fraud, where the cardholder later denies a legitimate transaction.

The EMV liability shift does not automatically protect you from these dispute categories. Instead, EMV terminals help by improving evidence quality. Transaction logs show that the card was present, the chip was read, and cardholder verification was performed properly. 

That gives you stronger documentation to fight illegitimate disputes, but you still need good internal processes.

To truly reduce chargebacks, merchants must pair EMV terminals with clear refund policies, accurate receipts, strong documentation, and prompt customer service responses. EMV protects the technology layer; you must protect the customer experience and operational layer.

Best Practices for Configuring EMV Terminals to Prevent Fraud and Chargebacks

Turn Off Unnecessary Magstripe Fallback and Force Chip Usage

One of the most effective ways to prevent fraud and chargebacks with EMV terminals is to minimize or disable magstripe fallback wherever your processor and card network rules allow it. Fraudsters actively look for terminals that still accept magstripe swipes on chip cards, because they can use cloned counterfeit cards in those environments.

Key configuration steps include:

• Ensuring your EMV terminals prioritize chip for any card that has an EMV chip.
  
• Reject transactions where the card has a chip but the cardholder insists on swiping, unless there is a documented, legitimate fallback reason (such as a damaged chip).
  
• Configuring your POS system to log fallback events, so you can track patterns and identify potential fraud.

By forcing chip usage, you reduce exposure to counterfeit fraud and strengthen your position under EMV liability rules. If a chargeback occurs, you can show that the transaction followed EMV guidelines and that any counterfeit activity is more likely the responsibility of the issuer.

Use Strong Cardholder Verification (PIN, CVM, and Signature Where Required)

EMV terminals support several Cardholder Verification Methods (CVMs), including online PIN, offline PIN, signature, and no-CVM for low-value or contactless transactions. To prevent fraud and chargebacks, configure your system to use the strongest verification method appropriate for your business model.

For example:

• At higher transaction values, configure EMV terminals to prompt for PIN or signature as required by the card network and issuer.
  
• Avoid overriding CVM prompts or bypassing the verification process unless absolutely necessary. Each bypass weakens your evidence if a chargeback occurs.
  
• For contactless EMV payments (tap-to-pay), pay attention to CVM limits. Above certain dollar thresholds, the terminal should prompt for PIN or signature to maintain strong verification and liability protection.

When you follow CVM rules, you create a clear, auditable record that the cardholder was present and authenticated. That record becomes evidence if you must contest a fraud-related chargeback.

Keep EMV Software, Firmware, and Keys Up to Date

EMV technology depends on up-to-date software, firmware, and cryptographic keys. Outdated terminals may fail to support the latest EMV standards, card profiles, or security updates, increasing the risk of declines, fallback, or misrouted liability.

To prevent issues:

• Work with your processor or payment provider to install updates regularly on all EMV terminals.
  
• Replace aging hardware that cannot support current EMV specifications or contactless EMV.
  
• Confirm that your terminals are properly EMV certified with your acquirer for the card brands you accept.

An updated EMV terminal not only offers better security and fewer technical glitches, but it also helps ensure that your EMV transaction data is valid and defensible in the event of a dispute.

Training Your Staff: Human-Level Defense for EMV Fraud and Chargebacks

Teach Staff to Always Use EMV Terminals Correctly

Even the best EMV terminals won’t prevent fraud and chargebacks if cashiers and servers don’t use them correctly. Fraudsters often rely on busy staff members who are willing to skip steps or “do a favor” by swiping rather than dipping.

Your staff training program should emphasize:

• Always inserting or tapping EMV cards first, never swiping when a chip is present unless the terminal explicitly requires fallback.
  
• Not overriding EMV prompts for PIN or signature without a valid reason.
  
• Double-checking transaction amounts before the customer inserts, taps, or enters a PIN to prevent disputes over incorrect totals.
  
• Being cautious when a customer pressures them to rush a transaction, refuses to provide a card, or insists that the chip “never works anywhere.”

By creating a culture where EMV procedures are non-negotiable, you dramatically reduce the margin of error that fraudsters try to exploit. This is one of the most practical ways to prevent fraud and chargebacks with EMV terminals in a real-world retail or restaurant environment.

Train Staff to Spot Red Flags and High-Risk Scenarios

EMV terminals handle the technical security, but employees must recognize behavioral red flags. Many successful scams still involve card-present interactions where the attacker is physically at the counter.

Teach your team to watch for:

• Customers who attempt multiple cards after declines, especially at high ticket amounts.
  
• Shoppers who avoid eye contact, appear overly nervous, or rush multiple high-value items.
  
• Large purchases of easily resellable items (electronics, gift cards, luxury goods), especially if the buyer seems unfamiliar with the product.
  
• Customers who refuse to insert or tap the chip card and insist “just swipe it.”

Provide clear instructions on what to do when they see a red flag: call a supervisor, request ID verification when allowed by card network rules and state law, or decline the transaction if it appears clearly suspicious. When staff are confident and empowered, your EMV terminals become even more effective at preventing fraud.

Handling Chargebacks with EMV Data: How to Use the Technology in Disputes

Collect and Store Detailed EMV Transaction Records

When a chargeback hits, your EMV terminals can become your best source of evidence. To make the most of this, you must ensure that your POS system and processor:

• Capture and store EMV transaction logs, including chip-read indicators, CVM result, and authorization responses.
  
• Keep itemized receipts that tie the EMV transaction ID to specific goods or services.
  
• Maintain records for the full chargeback time window, which is often up to 120–180 days depending on the card network and dispute reason.

When you respond to a chargeback, you can use this data to demonstrate that:

• The transaction was processed via EMV terminals, not magstripe.
  
• The cardholder was present and verified with a PIN or signature.
  
• The transaction amount and date match your records and the customer’s claim is inconsistent.

Issuers and card networks are more likely to rule in your favor when you submit clear, EMV-backed evidence that matches their internal transaction data.

Build a Standard EMV-Based Chargeback Response Playbook

To prevent revenue loss from chargebacks, create a playbook specifically tailored to EMV transactions. This playbook should include:

• A checklist of documents you gather automatically for any EMV-related dispute (EMV data, receipt, shipping or pickup confirmation, internal notes).
  
• Sample response templates that clearly explain how your EMV terminals were used properly for this transaction.
  
• Internal SLAs so your team responds to chargebacks quickly, before deadlines.

Make sure your staff understand the difference between:

• True fraud (stolen or counterfeit cards), which EMV is designed to reduce.
  
• Friendly fraud or misunderstandings, where the customer forgets a purchase or doesn’t recognize your billing descriptor.
  
• Service disputes, which may require proof of delivery, refund attempts, or customer communication.

Using EMV terminals helps you rule out some types of “true fraud” claims, giving you leverage to fight back when the cardholder’s story doesn’t match the technical data. But you still need a disciplined back-office process to use that EMV data effectively.

Combining EMV Terminals with Other Security and Compliance Tools

EMV + Tokenization and Encryption

EMV terminals protect the transaction in real time, but card data may still pass through your systems for settlement and storage. To further prevent fraud and chargebacks, many U.S. merchants combine EMV terminals with:

• Point-to-Point Encryption (P2PE) to encrypt card data from the terminal to the processor, reducing the risk of data breaches at the store level.
  
• Tokenization, which replaces card numbers with non-sensitive tokens for recurring billing, refunds, and card-on-file scenarios.

These technologies don’t directly change EMV liability rules, but they reduce the chance that attackers can steal usable card data. That, in turn, lowers your overall fraud exposure and the number of disputes that originate from compromised card numbers.

When you deploy EMV terminals along with tokenization and encryption, you create a multi-layered system where each component strengthens the others. A stolen database becomes less useful to criminals, and cardholders are less likely to see unfamiliar charges tied back to your business.

EMV and PCI DSS Compliance

EMV is a fraud-reduction technology, while PCI DSS (Payment Card Industry Data Security Standard) is a compliance framework for protecting card data. They are related but not interchangeable. Even if you fully adopt EMV terminals, you must still comply with PCI DSS requirements around network security, access controls, incident response, and data storage.

However, EMV terminals (especially when used with validated P2PE solutions) can reduce the scope of PCI DSS by keeping raw card data out of your internal systems. That makes audits simpler and lowers your risk surface.

From a chargeback and fraud perspective, strong PCI practices help ensure that your business is not the source of breached card data. This protects your brand image, decreases fraud-related chargebacks, and helps maintain favorable terms with your processor.

EMV Terminals for Different U.S. Business Types

Retail Stores and Specialty Shops

For brick-and-mortar retailers, EMV terminals must be integrated into a fast, customer-friendly checkout while still enforcing good security. To prevent fraud and chargebacks with EMV terminals in retail:

• Position terminals where staff can visually confirm card use, rather than leaving unattended devices in easy reach of tampering.
  
• Use EMV terminals that support contactless EMV for tap-to-pay, which speeds checkout but still uses chip-grade security.
  
• Configure alerts for multiple declines, high-value transactions, or repeated attempts with different cards.

Retailers should also pay attention to return policies. Fraudsters sometimes purchase goods with a compromised EMV card, then attempt to return items for cash or store credit. Connecting your EMV terminal data to your return process helps verify that the original transaction was legitimate and within policy.

Restaurants, Bars, and Hospitality

Restaurants and hospitality environments face unique risks because cards may leave the customer’s sight or be handled by servers. EMV terminals can help mitigate this, especially with pay-at-the-table devices that allow chip or tap transactions right where the guest is seated.

To prevent fraud and chargebacks in these environments:

• Use mobile EMV terminals so guests can insert or tap their card directly, reducing opportunities for skimming or card substitution.
  
• Ensure your EMV setup correctly handles tips and adjustments, so the final amount matches what the cardholder expects. Disputes over tips are a common source of chargebacks if receipts and EMV data don’t align.
  
• Train staff not to write card numbers down or process offline transactions unless absolutely necessary and documented.

These steps, combined with EMV terminals, make it harder for internal and external fraudsters to exploit the busy, high-trust environment of restaurants and hotels.

Service Providers, Mobile, and Field-Based Businesses

Contractors, home service providers, and mobile merchants increasingly use wireless or smartphone-connected EMV terminals. These devices let you accept chip and contactless EMV payments on-site, reducing the need for checks or later card-not-present billing, which carry higher fraud risk.

To use EMV terminals effectively in the field:

• Choose devices that are fully EMV-certified, not just magstripe or basic mobile readers.
  
• Enable digital receipts that capture location, date, and service details along with EMV transaction data.
  
• Use real-time authorization whenever possible instead of storing card data for later processing.

By taking payments through EMV terminals at the time of service, you reduce your exposure to disputes like “I never authorized this charge” or “The card was not present.” EMV transaction logs show that the customer was on-site with their card when the payment was made.

Choosing the Right EMV Terminal and Processor for Fraud and Chargeback Prevention

Key EMV Terminal Features to Look For

Not all EMV terminals are equal when it comes to preventing fraud and chargebacks. When evaluating terminals for your U.S. business, look for:

• Full EMV contact and contactless support, including chip insert and tap-to-pay.
  
• Support for major U.S. card brands (Visa, Mastercard, Discover, American Express) under current EMVCo specifications.
  
• Strong CVM options (PIN, signature, no-CVM thresholds) that match your business model.
  
• Built-in P2PE or secure encryption, especially if you want to reduce PCI scope.
  
• Easy remote updates so your provider can push EMV software and security patches without downtime.

Choosing terminals with these capabilities ensures that you’re not just “checking a box,” but actually using EMV to reduce real-world fraud and disputes.

Working with a Processor That Understands EMV Chargebacks

Your payment processor or merchant services provider should be more than just a gateway for EMV authorizations. They should be a partner in helping you interpret EMV data, set up correct configurations, and respond to chargebacks.

Look for a provider that offers:

• Clear documentation on how EMV affects liability for different dispute codes.
  
• Tools or portals that give you access to detailed EMV transaction information for each chargeback.
  
• Guidance on best practices for your specific industry, including recommended EMV terminal models, CVM settings, and anti-fraud features.

When your processor understands how to prevent fraud and chargebacks with EMV terminals, you benefit from optimized settings, fewer errors, and better support when disputes do occur.

FAQs

Q1. If I Have EMV Terminals, Am I Fully Protected from Chargebacks?

Answer: No. EMV terminals significantly reduce counterfeit card-present fraud and can shift liability away from you in some disputes, but they do not eliminate all chargebacks. You can still receive chargebacks for:

• Product or service quality disputes.
  
• Non-receipt of goods.
  
• Processing errors (duplicate charges, wrong amount).
  
• Friendly fraud, where the cardholder later denies a legitimate purchase.

EMV terminals help by showing that the card was present and the chip was read, which is powerful evidence against some fraud claims. 

However, you still need strong customer service, transparent policies, and careful documentation to manage non-fraud disputes. Combining EMV terminals with these operational controls is the best way to prevent fraud and chargebacks overall.

Q2. Do I Still Need to Accept Signatures with EMV Transactions?

Answer: Many card networks in the U.S. have reduced or eliminated signature requirements for most EMV transactions, especially low-risk or low-value payments. Instead, they rely more on the chip’s cryptographic security and PIN where available. 

That said, your EMV terminals may still prompt for signatures depending on your configuration, card brand, and transaction size.

From a chargeback perspective, signatures are now less critical than EMV transaction data and CVM results. Issuers pay more attention to whether the card was a chip card, whether it was processed through EMV terminals, and whether the transaction data is consistent with genuine use. 

A signature can still help in some disputes, but it is no longer the primary proof of cardholder presence. Focus on correct EMV usage, not just signatures, to prevent fraud and chargebacks.

Q3. How Do Contactless (Tap-to-Pay) EMV Transactions Affect Fraud and Chargebacks?

Answer: Contactless, or tap-to-pay, uses EMV technology in a wireless form factor. The card or mobile wallet still generates a dynamic cryptogram, which offers chip-level protection even though the card never leaves the customer’s hand.

For merchants, contactless EMV transactions:

• Maintain the same core anti-counterfeit benefits as contact chip transactions.
  
• Often have no-CVM thresholds for low-value purchases, meaning no PIN or signature is required, which speeds checkout.
  
• Can still provide strong dispute evidence because they’re marked as contactless EMV in the transaction data.

To prevent fraud and chargebacks with contactless EMV terminals, make sure you:

• Respect network-defined CVM limits so higher-value transactions still require PIN or signature.
  
• Train staff to keep an eye out for suspicious behavior, just as with contact chip transactions.
  
• Avoid reverting to magstripe if a contactless attempt fails; instead, fall back to chip insert where possible.

Q4. Why Am I Still Seeing Card-Present Fraud Even After Moving to EMV Terminals?

Answer: While EMV has reduced counterfeit fraud dramatically, card-present fraud has not disappeared in the United States. Some research shows that, for certain debit transactions, overall card-present fraud rates have shifted rather than dropped, with more losses falling on merchants and cardholders.

Reasons include:

• Continued reliance on magstripe in some environments, which remains vulnerable to skimming and cloning.
  
• Growth of lost-or-stolen card fraud where PIN or strong verification is not used.
  
• Fraud migration into card-not-present channels, which EMV terminals do not directly protect.

If you’re still seeing fraud, review your terminal configuration, fallback settings, CVM policies, and staff training. Ensure you’re using EMV terminals as intended and complementing them with other controls like velocity checks, ID verification where appropriate, and strong online fraud tools.

Q5. Do EMV Terminals Help with Online or Phone-Order Fraud?

Answer: EMV terminals directly protect card-present transactions, not card-not-present (CNP) payments such as online checkouts, phone orders, or mail orders. The EMV liability shift rules do not apply to CNP transactions, so CNP fraud typically remains the merchant’s responsibility.

However, EMV technology has inspired related standards and tokenization methods that can help secure remote payments. For CNP channels, you should use tools like:

• 3-D Secure (e.g., EMV 3-D Secure) for cardholder authentication.
  
• Address and CVV verification.
  
• Device fingerprinting and behavioral analytics.

So while EMV terminals themselves don’t handle online fraud, the broader EMV ecosystem provides frameworks that can complement your in-store EMV strategy and reduce overall fraud and chargebacks.

Conclusion

EMV terminals are one of the most powerful tools U.S. merchants have to reduce card-present fraud and shift liability away from their business. By using EMV technology correctly, you can dramatically lower counterfeit fraud, improve your chances of winning disputes, and provide a safer experience for your customers.

To truly prevent fraud and chargebacks with EMV terminals, though, you must treat them as the foundation of a broader risk strategy, not the entire solution. That strategy should include:

• Proper EMV configuration that forces chip use and minimizes magstripe fallback.
  
• Strong cardholder verification, with PIN or other CVMs where appropriate.
  
• Regular updates and certification for EMV terminals and supporting software.
  
• Thorough staff training to spot red flags and follow EMV procedures every time.
  
• A disciplined chargeback response process that leverages EMV transaction data.
  
• Additional security layers such as tokenization, encryption, PCI DSS compliance, and online fraud tools.

When you combine these elements, EMV terminals do exactly what they were designed to do: reduce in-person fraud, protect legitimate transactions, and give you the evidence you need to defend your business. 

That is how you prevent fraud and chargebacks with EMV terminals in today’s U.S. payments landscape—and how you build a safer, more profitable operation for the long term.