EMV is the chip technology in credit cards that is offered as a more secure alternative to swiping a credit or debit card. The chip is used to create an encrypted on-time use transaction code to interact with the payment terminal.
This extra layer of security makes EMV a far better choice for consumers for security reasons; EMV cards are far more difficult to duplicate, steal the credit card data through a skimmer – devices that are installed by criminals on the card readers to copy data going to the payment terminal, or steal the information in transit to the payment gateway.
But how does the use of EMV impact restaurants? What is the risk to the restaurant if they choose not to support EMV?
Non-compliance with EMV is not a criminal matter- you will not be arrested or face criminal liability for not using EMV. However, if your organization is not EMV compliant it means your business will be liable for any fraudulent charges associated with the card and you will have no legal recourse. For businesses selling more expensive items – televisions, laptops, home appliances, etc – the risk of not being EMV compliant is simply too high because a single fraudulent transaction can cost the business thousands of dollars.
Restaurants, cafes, and breweries, however, have a different risk profile because most transactions are smaller dollar amounts. If your business deals in low dollar transactions and has a low rate of fraud charges, the liability shift may not be a compelling reason by itself to move to EMV compliance.
Some payment processors are starting to add fees and/or higher transaction rates for non-EMV compliance. Be sure to check your bill for terms such as “EMV NON-ENABLED FEE”, “EMVNONENBL”, “EMV Non-acceptance fee”, and other similar terms. Some processors may choose to charge higher transaction rates for non-EMV compliance. Depending on your processor, non-compliance with EMV may be costing your business a chunk of money.
So why would a restaurant choose not to upgrade to EMV compliance?
If the business already has existing non-EMV compliant credit card readers, there is often a cost associated with changing those out to new models. If a business only has $200 or $300 dollars a year in chargebacks and fraudulent charges, isn’t being charged a fee or higher transaction rate for non-EMV compliance, and new card readers for all of their terminals would cost $3,000 then moving to EMV-compliance may not be the best use of limited funds, especially as many restaurants are experiencing declining revenues and higher labor costs.
Some restaurants may choose to avoid using EMV because it doesn’t integrate into their business processes on taking payment. This is especially true for dine-in restaurants that have traditionally taken the customer’s credit card from the table to run the payment through a central terminal or register. However, the use of mobile payment processor devices or other pay-at-the-table systems allow restaurants to rethink their payment flow to take advantage of EMV with minimal disruption to servers.