On crowded Saturday nights at Ada Street, a local bar in Chicago, Michelle Szot scrambles to fill pint glasses of watery Bud Light and basic mixed drinks for thirsty customers. After grabbing patrons’ credit or debit cards, Szot typically swipes the magstripe (the magnetic stripe on the back of a credit or debit card) to open the tab and hurriedly punches their orders into the POS. Repetition of this seamless process over the years has allowed the bartender to bounce in a trance-like flow from the tap to the liquor shelf to the bar, filling up drink orders in the same routine and keeping the bar running efficiently.
But with the imminent adoption of EMV chip credit card readers, this Chicago bartender, along with several thousand others across the nation, will find herself stumbling over the new credit card readers’ time-consuming nuances.
“Every couple of seconds that gets tacked on is another drink you can’t get served,” Szot said. “It’s money that you could’ve made — it’s money the bar could’ve made.”
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Over the past year, the rollout of EMV chip card readers in the United States has, to echo the words of experts in the field, been hell. EMV chip card readers, named after EuroPay, MasterCard, and Visa, the three companies that originally created the standard payment method, were designed to improve security to reduce fraudulent charges. Although they have been the standard method of plastic payment in Europe and Canada for more than a decade, card holders in America are just beginning to recognize their existence.
Across the States, a weakly enforced push to transition to using EMV cards properly came last year when a liability shift was announced from the credit card processors to the companies, incentivizing business owners to start using EMV card terminals as part of the payment method. But despite the shift, in the bar industry these new readers are virtually non-existent. And their eventual introduction might just compound the headache.
“I just had a customer from Chicago saying he had never seen one before,” said Eva Monteiro, a bartender at Toronto’s Baro (formerly Valdez) and El Caballito. “I find that crazy. I assumed everyone used them. I don’t even know what you guys use in the States then as an alternative.”
Until the introduction of EMV chip cards, credit and debit card users typically had their cards’ magstripes swiped at a processing terminal. This would relay the customer’s card data (their account number, their name, and the card’s expiration date), to the credit card processor, which approves or declines the transaction. According to Dave Miller, SVP Marketing of Buzztime, a wireless electronics company, the problem with the traditional card payment method is that “there is no validation performed on the card, so it’s not especially challenging for someone with malicious intent to create a fraudulent card from that information.”
Miller explained that with EMV cards, the card’s chip uses encrypted data to produce a unique set of data for each transaction. As a result, when the chip is properly dipped into a specialized terminal for an EMV card, the transaction data is relayed to the credit card processor, which verifies the data and then either approves or declines the transaction.
When discussing the EMV rollouts, Andy Goranson, president of the Omaha-based technology and processing system US Merchant Payment Systems, heatedly vented months of built-up frustration resulting from the planning and execution of the card readers’ rollout. Goranson explained that, although plans to force a transition to EMV chip readers have been in place since 2010, it wasn’t until October 1, 2015 that processors took any firm steps to push forward with the EMV changeover. On that day, a liability shift took place: while business owners were not forced to purchase and use specialized EMV card terminals, any time a customer swiped the magstripes of cards with EMV chips instead of inserting the chips into an EMV reader the bars were now liable for the fraudulent claims.
Despite the looming threat of having to eat the cost of a fraudulent charge, EMV card terminals in bars are nowhere to be seen. Several companies have invested thousands of dollars into their POS systems. Many of these systems, according to Goranson, have yet to introduce mechanisms for the EMV cards that are adaptable to the POS system. As a result, rather than utilizing the current EMV card terminals, several bar owners have decided to risk eating fraudulent charges and continue to use the old fashioned magstripe payment processing method.
“You gotta find that pain point that’ll make a merchant switch over,” Goranson said, claiming that the new EMV terminals will cost only a few hundred dollars; Focus Financial Atlanta stated in its Powerpoint on the EMV transition for bars and restaurants that the new POS system hardware will likely cost retailers $5,000 to $15,000 per venue, while the desktop and mobile card reader terminals run $400 to $1,200 per unit. Goranson explained, however, that some bar owners might value continuing to turn tables and keep the system running smoothly over having to adjust to the new system, but that attitude could change if enough fraudulent charges have to be covered by the owners.
The US Merchant Payment president, however, noted that by not using EMV card terminals, customers who know how to play the system can become a bar’s worst nightmare. If a knowledgeable patron decides to run up a high tab and then, after seeing his or her card swiped, calls up the company and claims the charges on a card with an EMV chip were fraudulent, the business will have to eat the losses. Imagine over the course of a month that 300 customers each dispute charges, unjustifiably, on a $30 claim. That’s $9,000 set aflame for simply not having the proper equipment.
According to Quartz, unnamed sources have also revealed that a tentative problem with EMV terminals is that bartenders will no longer be able to open tabs and will have to write tabs on pen and paper. Garson denied this was an issue, saying that bartenders can still open tabs on POS systems and then run the EMV credit card in the proper card reader. That is not to say, however, that this is a totally efficient idea.
More likely than not, when the EMV terminals finally hit bars and restaurants, bartenders will have to run tabs on the POS akin to how they currently run a tab for regulars, but with a few more steps. Rather than swiping the magstripe to collect the customer’s info, the bartenders will manually have to type in the name to open the tab — a total migraine starter if you’ve got 150 heads to serve in one night — and will continuously add to the tab as the orders increase. And when the customer wants to close out, the bartender then will have to dig through the stacks to figure out which card is a particular customer’s, let them know the total amount, insert the card, wait for the EMV card reader to transmit the bill to the credit card processor, and have the customer finally sign the receipt.
The most common complaint regarding these back end issues, however, is the final step of closing: the tip has to be included before the bartender runs the final total on the card.
“With a traditional EMV device, the server will generally need to ask for the gratuity to be entered in advance of the card transaction,” Miller of Buzztime said. “This process eliminates the fraud potential of the server entering a higher tip amount after the patron signs their check, but can also be uncomfortable for the server and patron, diminishing the guest experience.”
Such a conversation in the States would potentially create a super-awkward situation between servers and customers, although the issue never really arises in European countries where tipping is not a common practice. At the end of a meal or drinking session across the Atlantic, servers might ask the customer if they would like to leave a tip, but it is not “required” as it is in the States. This is because the waiter’s wage in Europe is often included in the menu prices. On the other hand, waiters and bartenders in the US make their living almost entirely — and in many cases, entirely — from additional tips. When the EMV card terminals do reach American bars and restaurants, this could make telling bartenders to give themselves a low-range tip a sort of humiliation for not doing a great job (or lets the bartender know the customer is unabashedly stingy).
Szot of Ada Bar in Chicago, however, couldn’t think of anything besides how much more of a pain in the ass her job would become once the EMV chip readers are installed. Putting herself in the customer’s shoes, she explained customers are already getting flustered about waiting for their cards to be processed in EMV card terminals at Walgreen’s, so imagine a customer’s reaction when alcohol is thrown into the mix.
When asked about the possible hindrances of the card, she said the typical way of processing the payment through an EMV terminal, which, if using the portable reader will require her to focus on customers dipping their cards and running them, will probably cost her anywhere from pouring one to two drinks. She predicts that given the decline in pay-per-drink efficiency, bars will have to enforce minimum payments, which could result in less spendthrift customers sidestepping the bar in favor of a no-minimum establishment.
“At a 300 [customers] a night blues bar, that’s gonna suck,” she said. “It’s gonna take an awful amount of time for me to make an extra drink or pour another beer to close things down … every four cards adds up to a minute.”
There’s definitely an ensuing circus following the learning curve, with customers and servers stumbling over the procedures for using the EMV chip terminal by forgetting to insert the tile or complaining obnoxiously about the delay. But if bars in practically every other credit-and-debit-card-wielding country in Europe and Canada have managed to adapt to EMV chip cards and their terminals, then it’s safe to say bars in the States can, too.