EMV can be very confusing for restaurants to navigate. We know that you are incredibly busy with your daily operations and have no time to sift through thousands of different EMV articles. So, we’re going to break it down very simply so that you can make your own informed decisions.
What is EMV?
EMV (Europay MasterCard and Visa) is a global standard of payment implemented with the purpose to replace insecure magnetic-stripe cards with secure chip cards. In October 2015, the often cited "liability shift" took place, effectively transferring fraud liability from card issuers to restaurants that had not yet upgraded to the new EMV standard.
The transition to EMV in the U.S. has been less than seamless. Almost a year after the official switch to chip cards, only a third of U.S. merchant locations accept them. Additionally, it is costing an estimated $6.75 billion to replace 15 million POS terminals with chip card-compliant machines.
It’s a rule, not a law.
There are many misconceptions surrounding EMV. It is neither mandated by law nor does it make you automatically PCI compliant. Thus, it is the choice of the operator to implement.
The liability shift.
If you choose not to upgrade however, you will be held accountable for fraud incidences at your establishment related to lost, stolen or counterfeit cards. You will also be accountable for incidences such as chargeback fraud, also known as friendly fraud (oh the irony). This occurs when consumers fraudulently refute their transaction by going directly to the bank. You have most likely encountered this unfair experience before and understand the frustration related to it.
Switching to EMV is not an easy feat and there are many adjustments your business will have to make.
Hardware required for EMV compliance.
To upgrade to the EMV solution, restaurants must purchase new hardware to accommodate the chip slot. EMV terminals generally cost from $100 to $500 per terminal, depending on what kind of features you want. In addition to equipment, time must be invested into training your employees how to use the equipment correctly.
POS integration and software upgrades.
Most restaurant POS systems do not yet offer integrated EMV solutions. If your POS falls into this category, you’ll have to enter the payment amount into both the POS and EMV terminal separately. This can be very tedious and creates room for employee error, especially during busy times. What’s more, if the transactions do not match up, you will be shuffling through receipts until the bright and early morning. If you do want integrated solutions, expect hefty upgrade costs from traditional POS providers.
Processing time.
Transactions take much longer to process with a chip card than a swiped card. To swipe takes around two seconds, to dip your card and wait for it to authorize can take up to 7 to 8 seconds longer. However, this issue has been recognized and some companies are trying to speed up processing times. For example: Visa recently announced Quick Chip for EMV, a technology enhancement that optimizes EMV® chip card processing and speeds up checkout times.
Chip and signature vs. chip and pin.
The currently mandated EMV standard in the US allows for both chip and signature and chip and pin. With chip and signature, the card is inserted into an EMV terminal, and upon approval, a signature slip is printed for the customer to sign and optionally write in a tip (similar to how we’re already accustomed to paying with cards). However, with chip and pin, the card is inserted into an EMV terminal, and the customer enters their pin number before the card is approved (similar to an ATM machine).
Because operators have their choice of chip and signature or chip and pin, you need to ask yourself which makes the most sense for your restaurant. Full service restaurants may want to continue having customers place their cards in check presenters, allowing the server to process the payment away from the table and adjust for the written tip later. Quick service restaurants, on the other hand, might prefer chip and pin to speed up the payment process.
What kind of operations do you run?
It is important to analyze your business and decide whether it is in your business’ best interest to implement EMV. You need to make sure that everything you are implementing is always optimizing your business.
Each hospitality operation has their own set of needs to run their operation successfully. Whether you implement EMV depends on what is most important to your business.
- If you are a fast casual operation with lines spilling out the door, you may be better off maintaining your fastest possible throughput by swiping instead of waiting for the chip to process.
- If you are a casual full service establishment with moderate check sizes and little to no previous chargebacks, you will have to weigh the costs to implement EMV with what you would save on chargebacks. In some cases, it may be more costly to upgrade to the EMV solution.
- If you are a fine-dining restaurant or an expensive nightclub, you probably value the security of your payments the most. With checks worth thousands of dollars, you need to make sure that each one is solid and guaranteed. In this case, you should implement EMV to avoid being liable for chargebacks and other fraud since these are huge losses that your establishment could incur.
Tips for implementing EMV.
If you are upgrading to EMV, make sure you are doing it right.
- Find a POS that is integrated with EMV. This way you are not wasting time processing checks twice.
- It is crucial to spend time training your employees about EMV and the exact process they must follow to utilize it properly. If misused, operators are still held liable.
- Look for terminals that also enable contactless mobile payments. This will ensure that you will be ready when mobile payments become more prevalent. (See below)
- Make sure that you are using the EMV technology properly. Some operators cover up the chip area and want customers to swipe to save time. These transactions are not protected and liability falls on the merchant. If you are going to implement EMV, you should do it correctly or else you are wasting time and money.
- Ensure your new system incorporates encryption and tokenization technologies. The National Restaurant Association considers these more important for restaurants than EMV. Without these technologies it could subject you to huge fines from card companies, customer lawsuits and damage to your restaurant brand.
Tips to avoid fraud if you are not implementing EMV.
If you have chosen not to implement the EMV solution or are not ready to, there are some methods to identify fraudulent transactions.
- American Express advises that businesses look out for abnormally large transactions because it could mean the thief is in a hurry to use the card before it gets stopped.
- Never accept payment if it is on a piece of paper or read out from memory.
- Look out for unusual-looking cards with dull finishes or typefaces that appear off. If you suspect this, ask for a form of ID to see if the name matches.
Mobile payments.
Mobile payments, while not as popular currently, are a very seamless and easy form of payment. It provides the security of the encrypted chip but it is a more convenient and painless way of paying with your mobile smartphone. Apple and Google are taking huge steps to make this form of payment ubiquitous with Apple Pay and Android Pay. The EMV shift has been a huge headache for America, and as more consumers go mobile, this method of payment may become the new norm.
