Who pays for fraud when it is discovered?

Fraud liability is often shared between both the merchant’s locations where the fraudulent payment occurred and with the banks, depending on the fraud situation. For example, in 2014 about 70 to 80 percent of fraud losses are found to be the merchant’s liability, according to the Kansas City Federal Study.

In e-commerce, merchants shoulder around 70 to 100 percent of the cost of online fraud, while in card present scenarios, merchants are responsible for around 38 percent of fraud. With the recent EMV transition and liability shifts, merchants will likely bear a larger chunk of card present fraud losses.

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