By : Andy Sirmon
September 22, 2015 11:26 AM
EMV has been promoted as “a more secure solution,” and the technology will undoubtedly serve its purpose of reducing fraud. However, this enhanced security brings some expected and unexpected outcomes – especially in the short term as consumers and business owners become familiar with the technology. In our recent post on the high-level operational impacts of EMV adoption, we addressed how EMV requirements such as a customer-present payment can impact your restaurant. Here, we’re going to further explore these operational impacts, as two points of differentiation for restaurant owners - the guest experience and speed-of-service – are about to change.
Your EMV Recap
Let’s start with what EMV means for your restaurant. On Oct. 1, a liability shift (note: liability shift, not a mandate) occurs around a new type of payment transaction: EMV, which stands for Europay, Mastercard and Visa, the creators of the new transaction guidelines. EMV-compliant cards also are referred to as “chip credit cards” in reference to the smart-chip technology.
All EMV-compliant cards come equipped with a microprocessor chip that generates a unique transaction ID for each use. This makes the cards more secure than their magnetic stripe counterparts and virtually impossible to duplicate. Magnetic stripe cards will continue to work after Oct. 1. However, if your restaurant does not support EMV transactions, it becomes responsible for fraudulent transactions made in your restaurant using a fraudulent EMV card.
Understanding Chip & Signature vs. Chip & PIN
EMV micro-chipped “smartcards” standards are applied in two ways: chip-and-signature and chip-and-PIN. While chip-and-PIN is the standard for much of the world, the U.S. will be implementing chip-and-signature . It’s important to note the differences between these two standards.
Chip-and-PIN EMV cards, which account for about 60 percent of EMV cards worldwide, require the cardholder to enter a four-digit personal identification number (PIN) to complete a transaction. Chip-and-signature EMV cards, on the other hand, require the cardholder’s signature to verify the sale.
All EMV transactions begin the same way at a payment terminal device. Instead of sliding the card through a cardreader, as is done with magnetic stripe-equipped cards, the EMV card is “dipped” into the reader, which collects account data from the embedded microchip.
Just as EMV cards are considered to be more secure than magnetic stripe cards, chip-and-PIN cards are a stronger defense against fraud than chip-and-sig cards because it’s more difficult for a thief to guess a card’s PIN than to forge the cardholder’s signature. In fact, according to a recent article on CardHub.com, chip-and-PIN is the most secure type of credit card technology. While there is no timeframe for migrating the U.S. to chip-and-PIN standards, operators need to be prepared for that eventuality sometime in the next few years.
Quick Service and Fast Casual: Invest in longer lines
With the implementation of EMV, your speed-of-service will likely experience slowdown. An EMV transaction is slower than that of the mag-stripe card due to various factors, including the customer’s familiarity with the solution. Operators should prepare for a lengthier queue, while looking at innovative ways to educate customers and offset likely frustration at the point of sale.
However, the counter isn’t the only location to take a hit in speed-of-service. As all EMV transactions will require either signature or PIN authentication, the transaction process will now require greater involvement from the customer. This has the potential to impact drive-thru operations due to the greater transaction times the EMV authentication process takes versus a traditional swipe. The future implementation of chip-and-PIN can impact it even more so; to obtain the required verification, restaurant staff would need to pass a payment terminal device from the window to the customer, obtaining verification from the customer in the form of their PIN.
With modern expectations of lightning-fast service and a simple guest experience, EMV has the chance to create ripples of dissatisfaction throughout your customer base.
Table Service: EMV Brings the Payment to the Table
In the U.S. the movement to chip-based cards has evolved overwhelmingly toward the chip-and-signature approach. However, table service operators, as a best practice, should prepare for the eventuality for a chip-and-PIN world. Additionally, in preparation for a chip-and-PIN world, table service operators should consider using a wireless payment device for 3 reasons: 1. When chip-and-PIN is implemented, customers will then be able to enter their PIN at the table. 2. If a restaurant is in an area with a lot of international customers they will be able to use their chip-and-PIN cards. 3. Currently in the U.S., operators will not know which type of chip-card (chip-and-signiture or chip-and-PIN) a customer has until it is “dipped”. If the card is a chip-and-PIN card, the guest experience may be like this:
- Waiter drops off bill
- Customer puts credit card into portfolio
- Waiter brings a pay at the table terminal (when available) to the table
- Waiter opens check from the terminal and inserts customer card
- Waiter hands terminal to customer to complete transaction (while remaining nearby in case the customer has questions)
- Customer adds tip into terminal
- Customer enters PIN into terminal
- Customer hands terminal back to waiter
- Waiter completes transaction, prints receipt and delivers to customer
The new payment process also requires payments be finalized before removing the card. This alters the payment flow for tips, as well as bar tabs. For bar tabs, this means operators will no longer be able to return a card to a customer before completing a transaction. This can result in confusion for the customer, as well as increasing the chance customers forget their cards and leave them behind.
On the Path to Success: The Importance of Staff Education
Even with the potential delays in speed-of-service for fast casual, quick service and table service restaurants, there are practices you can take now to minimize slowdown in the future. Step one? Training your staff. In our next post, we’ll discuss the importance of a quality staff education and how you can prepare your staff for a smooth transition to EMV compliance.