3 Common Questions Answered Regarding EMV Compliance
It wasn’t that long ago, almost two years, during which restaurants worried about an EMV compliance deadline. But that deadline got pushed, then arrived without any Armageddon scenarios.
There’s a lot of misinformation out there about EMV and what it means for the hospitality industry. Many establishments have already made the jump to more secure EMV chip card technology in their point of sale systems. But some restaurant owners are still on the fence about the transition, citing a number of reasons for avoiding change, including myths around securing cardholder data or the fear that EMV cards take longer than swiping. It’s understandable to have some reluctance, but EMV cards aren’t going away.
Let’s be clear, the credit card police won’t show up if you don’t have an EMV reader. But there are real and important considerations to review at your restaurant, and with your restaurant POS provider, before letting the subject go. Here Upserve discusses some of the biggest stumbling blocks and offers clear answers to help you make a decision.
Does switching to EMV chip card technology mean my restaurant can’t accept traditional cards?
No. The transition to EMV tech is just that – a transition. Current EMV card readers are designed to accommodate traditional magnetic strip swiping alongside the “chip dip” slots on the front of the machine. Of course, if a customer’s card contains an EMV chip, then the machine will prompt you to use that option, regardless of whether or not you’ve already swiped the magnetic strip.
Plus, for the forward-thinking restaurant, some terminals also accept near-field communication (NFC) cards which allow customers to tap the device without inserting anything. The information is read directly from the chip, with the same levels of security and encryption as the standard EMV chip insertion. These dual-interface cards aren’t that common yet, but technology moves quickly, and it’s always beneficial to stay ahead of these changes.
What risks do I face if I’m not compliant with EMV?
Most people consider the biggest shift when it comes to EMV is the switch from magnetic stripe to embedded chip. While that’s the most visible change, it’s the quiet liability shift that is most relevant for restaurant owners and operators. Prior to EMV, credit card issuers owned the liability for fraudulent chargebacks from unscrupulous customers.
That changed with the deadline for EMV compliance. Now, if an EMV chip card is swiped instead of dipped, and then a fraudulent chargeback is claimed, the business is liable for chargebacks above $25. If you have an EMV reader, though, the liability shifts back to the card issuer even if the chip is damaged.
This fine print can have a dark impact on restaurants and bars, which already face high overhead and tight margins. It’s not safe to expect the card issuers to do deep investigations of each chargeback, so the process of fighting these can be difficult, tiresome and time-consuming. Accordingly, there are some basic questions to consider when evaluating whether you need to make the switch.
Is your average check size above $25? - If your average check size is above $25, take a closer look at EMV. Liability for chargebacks above $25 shift to the restaurant when an EMV-enabled card is processed without an EMV reader, so you’ll likely be on the hook for most fraudulent chargebacks.
Are you a popular night stop or club? - Bars and clubs tend to see a higher rate of fraudulent chargebacks, which eats into margins and your managers’ time. If you’re a bar or nightclub that frequently see high tabs, it’s worth looking at bringing EMV online.
Do you want to avoid the hassle? - For many restaurateurs, adopting an EMV is a way to avoid the hassle of managing fraudulent chargebacks and worrying about liability. Peace of mind is enough for many restaurants.
How much will EMV compliance cost?
The price question requires a nuanced reply. In short, it depends. There are hardware costs, software costs and payments processing costs, and vendors will differ in their pricing methodology.
If you have a legacy POS in house (these are the larger, on premise solutions), then you’ll likely have to purchase a third-party EMV reader (or readers) to integrate with your point of sale. This can involve upfront hardware costs, service and support fees, and potentially costs associated with a software update. You’ll want to ask your vendor to list these out for you.
If you have a cloud-based POS, your restaurant POS may include an integrated EMV solution at a lower cost, requires no support fees and the latest software can download automatically. This is one of the reasons that restaurants make the switch from a legacy POS to a restaurant POS when purchasing an EMV solution: It’s convenient time to shift to a more affordable POS that’s easier to use and provides more flexibility around EMV.
Whatever you think about EMV, it’s important to weigh the facts and select a solution that works best for your business, your staff and your guests. Armed with good information, you can be confident in your choice.