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With so-called EMV or chip-enabled credit cards replacing older magnetic stripe plastic across the U.S., foodies and others accustomed to leaving a tip may encounter some puzzling problems. That’s because the way EMV cards are processed for payment is slightly different than what consumers are accustomed to, and as a result you may need to learn a new way of tipping when using a credit or debit cards.
What’s Different with EMV
Want some trivia to stump your friends at the bar? EMV doesn’t stand for electronic merchant verification or anything remotely related to that. The initials stand for Europay, MasterCard, and Visa – because those are the “big three” card companies that partnered to create this chip-embedded plastic technology. One of the big differences you will find using chip-cards is that a unique, one-time code is created to transmit the card data. That makes these cards less vulnerable to hacking because even if a criminal steals that code as it travels across the Wi-Fi airways, it won’t work for any future transactions – making it worthless data.
The one-off feature, however, can potentially make tipping more complicated. Typically the consumer would pay for their meal by handing it to the waiter so they can run the card. The waiter then brings the receipt out for you to sign, at which time you add in a tip. After all that’s done, the server takes your signed receipt and adjusts the tip. Chip-enabled cards aren’t run a second time, so that process will soon be history.
The VISA Solution
According to VISA, the easiest way to avoid this problem is to use a form of plastic that carries the VISA logo. An EMV reference guide by VISA explains that a gratuity of up to 20% may be added after the cost of the meal, bar tab, salon service, or whatever service you want to give a tip for. What if you want to leave more than a 20% tip? In that case you have to add the difference in cash because there is no other way to work around that limitation. Although it can be hard to find information on the EMV process from other, lesser-known banks, you can safely assume that they will work similarly to how VISA cards will work.
A Positive Change
There is one upside to this new, more complicated procedure – less fraud. Currently consumers pay for their dining experience by handing their credit card to the server, they walk away with it, and bring it back after charging the card. However, this hand-off process has led to many acts of credit card fraud since the card is taken out of sight of the consumer and dishonest servers make additional, unauthorized payments or steal the credit card information to use later on.
Instead of being able to add the tip after you have paid for your meal or other services, you will have to add the tip before you insert or “dip” the card into the machine.
In many countries, the server will bring the portable terminal to the table so the plastic never leaves the consumer. If merchants find it easier to process tips by investing in portable terminals, that would add another level of security.
Advice for Merchants
If you accept plastic at your store, make sure your customers are aware of these changes so you and your employees don’t lose the opportunity to process valuable tips. Let the customer know they can add the tip before you run their card or they can leave a tip in the form of cash. It’s very important for all parties to remain transparent, otherwise some customers may walk away without leaving a tip, and you – and your servers – will get nothing.
Check out these resources for more information about America’s transition to chip-cards: