It’s half-time at the big game. Food lines are long, tensions high. A consumer steps up to pay for an order of cheesy fries and pulls out – a chip card. While the consumer’s financial institution (FI) has adopted EMV chip card technology, the food vendor he’s visiting has not. The result: a card swipe versus the more secure insertion.
This scenario is not unlike what’s happening at many food service and hospitality businesses around the U.S. These types of merchants have a tendency to lag in chip card adoption. The biggest deterrent to adoption may not be the cost to upgrade terminals or even the time associated with getting those terminals certified. Instead, the concern may be the transaction time.
When consumers swipe their cards, the transaction is complete in a split second. Conversely, completing a chip card transaction takes anywhere from 10-12 seconds. For food service and hospitality businesses who pride themselves on getting consumers in and out, slow transactions could be considered detrimental. Transaction times are getting faster, however, especially with solutions like Visa’s Quick Chip and Mastercard’s M/Chip Fast.
Some food service and hospitality businesses may find the simplicity of magnetic stripe transactions too enticing to give up. Cards are swiped, consumers sign the receipts and add tips accordingly. For restaurants and other hospitality services using the information contained in cards’ magnetic strips as identification, migrating to chip card technology could mean requiring consumers’ to enter PINs to complete transactions.
While avoiding chip cards can seemingly keep transaction speeds lightening-like, the cost of such behavior is fraud. In 2016, a number of restaurants and hotels found themselves victims of card fraud. Wendy’s, Trump Hotels and Hilton properties were just a few hit by thieves after consumers’ card data.
Although chip card acceptance may not be the be-all, end-all solution to data breaches at hotels and restaurants, chip technology does arguably add an extra layer of security. Visa recently reported merchants using chip-enabled technology saw a 52 percent drop in counterfeit fraud in the first full year since the U.S. started moving to chip cards. In that same timeframe, counterfeit card fraud decreased by 14 percent across all merchants.
As more merchants convert to chip technology, fraudsters will likely go for the easiest targets – those that have not yet made the conversion. For food service and hospitality businesses slow to adopt chip-enabled terminals, the risk is two-fold. First, there is the potential for fraud, and, second, there is the cost associated with being non-compliant. It will be interesting to see how the food service and hospitality industry responds to mounting fraud potential.
