Washington Restaurant Market Watch: EMV facts and fiction

Washington Restaurant Market Watch: EMV facts and fiction https://wahospitality.org/wp-content/uploads/2013/02/creditcarda388-388x198.jpg

By Paul Schlienz

Mark Oct. 1, 2015, on your calendars. This is an important date for every restaurant operator.

On October 1, a liability shift will change who is responsible for counterfeit cards used at restaurants. Whoever is least prepared to accept the new EMV-enabled payment cards, which, unlike the familiar magnetic strip cards we all know, include a special microchip that makes them more secure, will be responsible to pay for chargebacks.

For such an important issue, however, there is still a great deal of misunderstanding about EMV and what it does and doesn’t do. One misconception is that implementing EMV in your restaurant is a government mandate that will be enforced by federal law.

“A lot of people think EMV is a government regulation or mandate, but it’s not,” Chester Ritchie, senior vice president of Worldpay, a payment-processing company, told Business News Daily. “It’s owned by EMVCo, a joint venture owned by major credit card brands [Europay, MasterCard and Visa]. They dictate what EMV is, when [liability shifts] are mandated, who it applies to, etc.”

No one in the government is going to force your restaurant to implement EMV. You will face no fines if you miss the October 1 liability shift deadline. You are free to decide if you want to implement EMV by that date.

EMV is also not a requirement for complying with the PCI Data Security Standard. Although EMV can be an important component of your restaurant’s data security strategy, there is no requirement for it. Nor will implementing EMV make you PCI compliant. And you will still be required to comply with the PCI standards if you are EMV-compliant.

Another major misconception of many operators is that once you implement EMV, you won’t be able to accept credit cards with magnetic strips. As anyone who’s been to Europe and other parts of the world where EMV is the rule can tell you, your U.S.-issued magnetic strip cards are still accepted by EMV-enabled POS terminals. The switch over to EMV will be an extended transitional period, not something that happens overnight.

Magnetic strip credit cards, indeed, are going to be with us for quite some time. Estimates are that a mere 20 percent of U.S. cardholders will have EMV-ready cards by October 1. Industry experts believe it will take three to five for EMV to reach full acceptance in the U.S.; in Europe, it took even longer.

“We expect less than 50 percent of merchants to have EMV [technology] by the deadline, but right after that, as customers continue to receive EMV cards, they’ll be aware that their information is more secure,” Ritchie said. “As non-EMV merchants experience more fraud, customers will demand it because fraud is too much to bear.”

Many restaurant operators also mistakenly think that EMV will protect their businesses’ from data security breaches. While this would be nice, it is, unfortunately, not true.

“…companies gather and store information like names, addresses and credit card information,” Andrew Avennessian, executive vice president of technology and consultancy for security firm Avecto, told Business News Daily. “Even with EMV, this data is still available to fraudsters and can be exploited through sophisticated malware exploits. Because these other security holes will continue to exist, EMV will need to be complemented with additional security measures.”

In store fraud may go down due to EMV’s more secure card technology, but it is hardly a silver bullet.

“”In-store fraud [may go] down with the advent of EMV, but online fraud has gone up,” Michael Bruemmer, vice president of consumer protection at Experian Consumer Services, told Business News Daily. “It’s not a panacea where [EMV] takes fraud down to zero.”

Finally, a large number of operators mistakenly believe that transitioning to EMV is easy as plugging in a new payment terminal. Regrettably, this is simply not the case.

When making your restaurant EMV-ready, you will have to decide on which POS system, payment processor and payment terminal you’ll want to use. Additionally, you’ll need to thoroughly understand the impact of EMV on your operation, train your staff appropriately and be prepared to assist customers with the new technology.

“How and when to implement [EMV] is a decision each merchant must make for themselves,” Ed Learned, a payment industry expert, wrote in Merchant Link. “The answers will be different for each merchant. Before making any decision, talk to your POS vendor, payment processor or gateway provider to understand your options.”

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