Understanding “Fallback”

Fallback normally refers to “an alternative plan that may be used in an emergency”. Today fallback is quickly becoming a commonly used word in the context of EMV credit and debit card payment transactions.

“Fallback transactions are those initiated in the card-present world of retail involving contact EMV chip cards at chip-capable terminals where chip technology is not used to capture card data”.

In most cases, this means that the legacy magnetic stripe on the card becomes the next available technology used to capture card data and authorize payment when a chip can't be used.

Fallback transactions can occur when EMV hardware is deployed and the respective payment terminal software is not turned on. The merchant’s terminal may have the EMV chip technology present but the terminal software is not enabled. However, if some EMV cards are working and others not, then the terminal may not have the appropriate AID’s (application identifiers) loaded on it. Alternatively, there maybe a situation where bad terminal software was deployed or faulty chip readers can cause a failure to read the EMV chip card properly. These situations can easily be fixed by downloading the corrected terminal software/configuration or replacing the faulty reader. Faulty readers can occur after many years of wear and tear from terminal usage. Intermittent fallback transaction issues can occur because of merchant training issues.

In all cases, fallback needs to be avoided where possible to prevent fraudulent card activity and un-necessary charge backs for merchants. In mature EMV jurisdictions like Canada, fallback on Interac Debit is no longer allowed for Canadian domestic cards. Now that the EMV migration is in full swing across the USA, it won’t be long before US banks also start declining fallback transactions.