Mastercard Reason Code 4870: Chip Liability Shift

What Mastercard Reason Code 4870 Means

Mastercard reason code 4870 is titled Chip Liability Shift and falls under the Fraud category. It is Mastercard's equivalent of Visa's 10.1 and 10.2 codes combined — a single code that covers both counterfeit card fraud and lost/stolen card fraud at the point of sale when the card-present transaction did not use the EMV chip.

The Mastercard EMV liability shift, like Visa's, transferred responsibility for in-person card fraud from issuers to merchants who had not upgraded to chip-reading terminals as of October 2015. If a chip-capable card was processed via magnetic stripe swipe or manual entry at your terminal and the transaction turns out to be fraudulent, you as the merchant bear the loss. The premise is that a chip read would have detected the fraud and declined the transaction.

Cross-Network Equivalent Codes

Common Trigger Scenarios

• Chip card swiped instead of dipped. The most common trigger. A chip-enabled Mastercard was swiped at your terminal rather than inserted for a chip read. If the card was counterfeit or stolen, full fraud liability falls on the merchant who accepted the swipe.
• Fallback transaction on a chip card. The chip reader failed or showed an error, and the transaction fell back to magnetic stripe. Fallback transactions lose EMV liability protection, and any resulting fraud becomes the merchant's responsibility.
• Manual key entry instead of chip read. The card number was manually entered rather than chip-read — whether because of a reader malfunction or staff preference. Manual entry eliminates all EMV authentication and creates full liability exposure for card-present fraud.
• Terminal not EMV-certified or software outdated. A terminal running outdated firmware may fail chip reads at a higher rate, driving fallback frequency up. Alternatively, a non-certified terminal may not perform proper EMV validation even when the card is inserted.
• Stolen card used at non-PIN terminal. A stolen chip card was used at a terminal that accepted chip-and-signature or contactless without PIN. No PIN requirement meant the thief could use the card freely, and the merchant may face a 4870 if the chip was not read properly.

Key Deadlines & Timeframes

Evidence You Will Need

Your defense requires transaction-level EMV data confirming the chip was read. Generic terminal certification documents are not sufficient.

• EMV chip authorization data from your processor for the specific disputed transaction: Application Identifier (AID), Authorization Response Cryptogram (ARQC), and Terminal Verification Results (TVR)
• Service code from the card data showing a value beginning with 2 or 6, confirming the card is chip-capable and the chip interaction was recorded
• Transaction receipt showing "CHIP READ" rather than "SWIPE," "FALLBACK," or "MANUAL ENTRY" — receipt language confirms the processing method at the point of sale
• POS terminal log for the transaction showing no fallback occurred and the chip was successfully read
• For 4871 (PIN variant): PIN verification result confirming online or offline PIN was successfully verified for the transaction
• Terminal certification documentation showing EMV compliance — supporting but not primary evidence

How Merchants Lose This Dispute

• Submitting terminal certification instead of transaction data. Terminal certification proves your terminal is chip-capable. It does not prove the chip was used for this specific transaction. Mastercard reviewers require the transaction-level EMV authorization data, not general terminal documentation.
• Receipt shows swipe or fallback. If your receipt clearly shows the card was swiped or processed in fallback mode, submitting it as evidence confirms the liability shift rather than rebutting it. Do not submit evidence that acknowledges magnetic stripe processing.
• Transaction was genuinely swiped. If the card was swiped because a staff member habitually swipes instead of dipping, because the chip reader was broken, or because the customer insisted, the 4870 chargeback is valid. Accept it and fix the underlying process.
• Waiting too long to pull authorization records. EMV transaction data may not be retained indefinitely by all processors. Request the specific authorization records immediately upon receiving the chargeback — do not wait until the response deadline approaches.

Response Framework Overview

1. Assert chip read occurred. State clearly that the transaction was processed via EMV chip, not magnetic stripe or manual entry, and that you have authorization data to confirm this.
2. Present the EMV authorization records. Lead with the AID, ARQC, and TVR from the transaction authorization confirming chip interaction occurred.
3. Attach the transaction receipt. Include the receipt showing "CHIP READ" or equivalent confirmation of the processing method.
4. Reference the terminal log. If available, include the POS log entry for this transaction confirming no fallback occurred.
5. For 4871 disputes: add PIN verification records confirming PIN was captured and verified for this transaction.

Prevention Tips

• Require chip insertion on all chip-capable cards — no swipe option. Configure your terminals to reject magnetic stripe processing on chip-capable cards. Remove the ability for staff to swipe a chip card by disabling the mag stripe fallback option at the terminal configuration level.
• Enable PIN CVM where supported. Chip-and-PIN is significantly more secure than chip-and-signature for in-person transactions. If your terminal and acquirer support PIN for all card types, enable it to reduce both 4870 and 4871 exposure.
• Monitor and minimize fallback transaction rates. Your acquirer can report on your fallback rate. Any rate above 1-2% indicates a hardware problem generating chip read failures. Persistent chip failures drive customers and staff toward swipe, creating ongoing 4870 exposure.
• Keep terminal firmware current. Outdated EMV firmware is a leading cause of false chip read failures. Schedule quarterly firmware update checks with your terminal vendor to ensure your readers are operating correctly.

Frequently Asked Questions

How does Mastercard 4870 differ from Visa 10.1?

Both codes enforce the EMV liability shift for card-present fraud, but Mastercard 4870 covers both counterfeit and non-counterfeit (lost/stolen) scenarios under one code, while Visa splits them into 10.1 (counterfeit) and 10.2 (non-counterfeit). The defense approach is essentially the same: prove the chip was read via EMV authorization data.

What EMV data do I need to win a 4870 dispute?

You need transaction-level EMV authorization data from your processor: the Application Identifier (AID), Authorization Response Cryptogram (ARQC), Terminal Verification Results (TVR), and service code from the card data confirming chip interaction. Your processor or acquirer can pull these records. A receipt showing "chip read" is supporting but the authorization data is primary.

Does Mastercard have a separate code for non-counterfeit chip fraud?

Mastercard uses 4870 for both counterfeit and non-counterfeit EMV fraud. Some disputes may be coded as 4871 (Chip/PIN Liability Shift) when a PIN-capable card was used without PIN verification. Check your documentation carefully — 4870 and 4871 have slightly different defenses, with 4871 specifically addressing PIN bypass situations.

What is the Mastercard fallback transaction rule?

Mastercard rules require merchants to attempt chip reading when a chip card is presented. If the chip fails after multiple attempts, the merchant may fall back to magnetic stripe, but this creates liability exposure for any resulting fraud. Mastercard monitors fallback rates and excessive fallback can trigger compliance action separate from individual chargeback liability.

Related Codes & Resources