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EMV Liability Shift: What Restaurant Owners Need to Know

Payment Processing

October 1, 2015, marked an EMV liability shift for U.S. businesses. As the use of EMV (Europay, MasterCard® and Visa®) technology accelerates, restaurants are among the first to be affected—particularly in the area of credit-card fraud liability. Before October, it was the credit-card issuer who absorbed liability for fraudulent customer transactions. Now restaurants and other small businesses must assume fraud losses when a chip card is used for payment but processed with a non-EMV enabled terminal or older "swipe-card" technology.

The bad news: some up-front business costs will be involved in the purchase and installation of new point-of-sale terminals with EMV-reader technology. In the short term, restaurant owners and other small businesses must update swipe-only terminals to become capable of accepting chip cards (EMV-enabled terminals will also accept magnetic stripe cards during a transition period).

The good news: use of new "chip and pin" technology will likely result in far fewer cases of credit-card skimming fraud, thus reducing the incidence of chargebacks and protecting the revenue generated by restaurant customers. Also, because the cardholder now adds tips directly to the terminal, there will be less need for back-office adjustments.

Employee and Customer Education

With EMV technology, the credit card stays with the customer throughout the entire payment transaction. Gone are the days when waiters take the credit card to a remote terminal. Instead, upgraded terminals will be brought to the table where the customer will "dip" the card for payment. This may add time to the payment transaction, according to Andy Sirmon of NCR Corporation, even when things go smoothly.

"If a customer removes the card too soon, the process starts all over again, adding even more time and possibly resulting in initial frustration, both from the customer and others who are waiting in line," he says.

The best way to avoid frustration is through education. Restaurant owners should begin the process of teaching servers how to use the new technology and how to educate customers, since many customers will be unaware of the change. This includes the ability to recognize differences between magnetic stripe cards and chip cards before a transaction takes place. Staff should be able to guide customers through the insertion process. Restaurants can also educate customers through on-site pamphlets and by providing information via their website and social media channels.

Many restaurants and other businesses are understandably reluctant to embrace this change in payment method, but in order to avoid liability for fraudulent transactions, it’s a smart idea to get on board quickly. If your restaurant is still without EMV-enabled terminals, Paychex Payment Processing Services offers a wide range of EMV-enabled terminals that are affordable for any size business.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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