Why should I be penalized if a customer chooses to swipe their EMV card instead of using the chip?
If you are using a non-EMV terminal, customers do not have the option to use their EMV chips; they have to swipe their card to pay for goods or services. In these cases, you are liable for any fraudulent transactions.
If you are using an EMV-enabled terminal, the device recognizes if the customer swipes an EMV card, and prompts them to insert their card into the EMV slot. Some card issuers require the customer to type their PIN. If the terminal cannot read the chip on the card, many issuers allow the customer to swipe their card instead. This is called a fallback transaction, and in most cases you are not liable for any fraudulent transactions or chargebacks.