EMV Compliance Challenges for Restaurants

Since the global EMV initiative in late 2015, EMV has become commonplace for businesses with low- and high-risk merchant accounts. Despite not being required by law, EMV compliance means businesses and consumers are protecting themselves from greater risk, but it can also present some challenges for certain types of businesses such as restaurants.

What Is EMV?

EMV stands for Europay, Mastercard, and Visa. Even before EMV became almost necessary in 2018, the technology already existed in the 1990s. This was developed to protect the cardholders’ information by embedding it. The embedded chip and the magnetic strip hold the cardholder’s payment information.

The embedded chips are far more secure, where magnitudes of encryption are nearly impossible to hack. While most credit cards and debit cards currently have chips and magnetic stripes, this will soon change. Eventually, payment processing will venture into chip-only payments.

The United States has not been that enthusiastic about EMV adoption. The U.S. was one of the last nations to adopt EMV technology; EMV compliance in the U.S. was among the lowest compared to other countries, with only 15% of businesses responding to the call.

Since the introduction of EMV technology, credit card fraud dropped significantly.

Why Are Some Restaurants Not EMV Compliant?

Originally, the cut-off for EMV implementation was set for October 01, 2015; however, due to slow adoption, Visa and Mastercard postponed the cut-off date until April 2018.

Before this deadline, banks were responsible for the cost resulting from fraudulent transactions, but now, the business where the fraudulent activity occurred would absorb the cost if they are not EMV complaint.

Instead of updating their payment processing systems, though, some restaurants chose to forgo EMV compliance. But why?

It turns out that meeting the requirements for the EMV liability shift would cost restaurants more compared to the fines and chargebacks from credit card companies. According to the hospitality technology, “in clear violation of PCI-DSS standards, some retailers and restaurateurs are storing the very Track 2 card data that PCI and EMV were supposed to protect. They are doing this in order to maintain an audit trail in an effort to contest the increasingly fraudulent chargeback activity.”

Some restaurants see that the new technology will impact turnaround time and customer experience as the EMV transactions tend to require more processing time compared to magnetic stripe transactions. Besides, EMV-compatible POS systems can incur an added cost for new equipment as old hardware is not EMV capable. 

Merchant providers may be able to provide EMV-capable card readers but this could mean additional expenses. The added transaction time and extra cost do not compensate for the added protection.

Although fraud transactions are less frequent at restaurants, the possibility is still there. While a cup of coffee is not going to put you out of business, the accumulation of small fraudulent charges like that can end up costing the business big time in the long run.

How to Become EMV Compliant

Again, even if EMV is not a law requirement, taking the step is making sure you are storing your customers’ data with extra care.

Talk to a merchant services provider to understand the process to become EMV compliant. Additionally, train your staff on EMV compliance so they can also inform guests about the benefits of this new technology all around for safer transactions.