Merchants will still be liable, as per their agreements with their credit card processors. Merchants are 100% liable for all fraud now, and this won't change. The visa cartel of issuing banks won't penalize its members, because this will be a real cost for them to issue chip and pin cards. Up till now Visa has incurred no cost in security. PCI is 100% cost to the merchant. Visa can say this, and it sounds good, but if a customer disputes a charge in a card present environment and the merchant can't produce a vaild signature under existing contracts the merchant will lose.