No More Swiping.
A well-known Friday night scene at an Italian restaurant—the family at the corner booth is finished, surfeited to capacity on tiramisu, bread sticks, and double crust pizza. Time to pay. Dad (or whomever) reaches into his wallet and hands the waiter his credit card. This scene will be archaic soon because of the upcoming changes to a new credit card system.
Another scene—a rushed young man in a black suit fights the lines at the bakery to pick up a dozen delicacies and 10 orders of coffee for the board meeting. He’s frustrated at the backup and the inefficiency. This will change, too, thanks to mobile ordering and payment technology, very popular with the millennium generation, and expected to double by 2016.
Is your restaurant readying for these changes?
A New Shift in Technology
No more swiping cards. No more customers handing their cards over. No more magnetic strips. These changes are because of the EMV system. The EMV system (named after its developers—Europay, Mastercard and Visa) is a chip card technology which will purportedly bring greater security for customers’ data and make hacking more difficult. The new system utilizes embedded microprocessor chips that store data more securely than the magnetic strips. The chips generate a one-time code for each transaction, making it more challenging to counterfeit.
The switch to EMV is targeted for October 2015. European countries made these changes nearly 10 years ago. Following security breaches in the U.S. during the 2013 holiday shopping season, motivation to move forward has increased.
However, Liz Garner of the National Restaurant Association has cautions about seeing the EMV technology as the solution to credit card fraud. The NRA and other retailers are suggesting that a PIN element should be a required additional level of security with the changes. The NRA and other retailers are also requesting an extension on the October 2015 deadline. It took Canada (with an economy smaller than the US) over 7 years to move to a new credit card technology. So, it’s fair to say the date is a moving target, but one that can’t be ignored.
A Shift in Liability
Tom Glara of the Wall Street Journal advises of an upcoming shift in liability that merchants should be mindful of. Anytime credit card fraud happens, a key issue is—who’s responsible for the cost? Once the changeover occurs, liability will shift to whoever is using the least up to date technology for charges. So, if your restaurant is using the old swipe system (after October 2015) and fraud occurs, guess who will be responsible? If you’ve switched over to the new system, but the card issuing company hasn’t replaced the old card with the new chip card, the buck stops there. Glara points out that this isn’t intended to promote finger pointing and blame, but rather to facilitate joint, diligent efforts amongst banks and merchants to migrate to the new system.
Another Option—NFC or Mobile Phone Payments
Another swipeless payment option is using mobile phones or key fobs. It‘s a cutting edge checkout considered to be very secure. It’s fast—just tap or swipe the device over the receiver and go. There’s never a moment of handing over the card, phone or fob to the merchant.
NFC is based on “near field communication” (NFC) and some tech experts are predicting it should be considered as an alternative system or complimentary to EMV. With NFC, a short form radio signal is used to make payments by a customer’s mobile device or key fob. According to a recent article in Small Business Trends a special chip inside the device sends payment directly to the credit card company, and the data is sent with multiple layers of security. NFC enabled credit cards have been around for a while. Merchants and restaurant owners do need terminals that accept NFC payments. Even though it’s a swipeless technology, there are no additional charges for the merchant.
Many restaurants are introducing mobile ordering and payments. It improves the customer experience and eliminates two frustration points for the customer: (1) calling in an order or standing in line while an order is readied on site, and (2) waiting in line to pay. Today’s consumers are in a rush. The more efficient you can make their purchase experience, the greater the likelihood that they’ll become regular customers.
If you haven’t considered how the looming changes to credit card payments might affect your restaurant, it’s time to do so. Though the stop swipe date is a moving target and it’s hard to say whether EMV or NFC will dominate, change is imminent. The good news is that many of the new terminals are capable of processing either EMV or NFC transactions. And the good news is that consumers who are confident of the efficiency and security of their payments will be more likely to dine again soon.