Thanks for writing in! Even if your customer authorizes the transaction, they are still able to open up a payment dispute with their bank. That's because it's a privilege upheld by their card-issuing bank, rather than Square. Once we get notice of a dispute, we reach out to the seller to get more information and documentation so we can challenge the dispute on their behalf.
However, we are not able to challenge EMV disputes. These disputes are automatically closed in favor of the customer due to the EMV Liability Shift. The reason you should use a Square Contactless and Chip Reader, rather than the old-fashioned magstripe reader, is to make sure you are protected from this type of dispute.
These new chip cards (aka EMV cards) are meant to prevent the counterfeiting of magnetic strips, which has become a prevalent issue in the credit card industry in the recent years. These chip cards are more secure because they cannot be duplicated. As a result, banks are pushing all merchants to upgrade their payment terminals to accept chip cards.
In the past, if a merchant swiped a fraudulent card, the banks would absorb the costs. Now, if a merchant is not set up with an EMV reader to process chip cards, the bank is holding the merchant responsible. The responsibility to cover the costs for certain types of chip card-related fraud transactions has been shifted to the merchant or party that accepted that payment.
