Technical fallback occurs when a chip card is used at a chip capable terminal, but for technical reasons, the chip transaction cannot be completed, and the transaction is instead processed using the magnetic stripe.  

The card associations monitor the amount of technical fallback/magstripe read transactions as they are less secure than chip transactions.  These less secure transactions create a weakness in the overall fraud protection provided by chip transactions and leave open opportunities for counterfeit fraud or the use of lost and stolen cards by avoiding the protection provided.  

Failure to reduce the percentage of technical fallback transactions, could result in fines being assessed.

Steps to reduce fallback transactions

Always process chip card transactions by inserting the chip card into the POS device.

Always attempt to read the chip two or three times after an initial unsuccessful attempt.

Do not allow a chip card to be inserted improperly (upside down, backward, etc.).

Don’t allow a chip card to be removed prior to the POS device prompting for removal.

If the chip is damaged, ask the customer for another form of payment.

Do not process transactions in a chip capable device that is not enabled to read chip cards.

If there are any POS devices not enabled for chip cards, contact your POS equipment provider to enable chip capability.

Chip card technology increases the security of the transaction.  If a chip card is swiped instead of inserted – the advanced security of the chip isn’t used. Chip transactions also significantly reduce merchants’ chargeback liability.

We appreciate your assistance in ensuring the proper processing of chip card transactions and reducing the amount of magnetic stripe read transactions.  If you have any concerns with your ability to properly process chip cards, please contact our customer support team at (800) 261-0240.