There aren't many situations where we're willing to hand over our credit cards to strangers, but in the restaurant industry, the practice is all too common. That makes it a prime place to commit credit card theft, because in some cases, servers have been able to quickly skim the magnetic strips of credit cards to extract data that enabled them to create counterfeit cards.
With the introduction of EMV chip credit cards, consumers are better protected, because EMV transactions are based on unique digital data that can't be reproduced. According to Visa, counterfeit fraud dollars dropped 75 percent in March 2018 compared to September 2015 for merchants that upgraded their equipment to accept EMV chip cards.
Despite that encouraging news, online credit card fraud is expected to increase 60 percent in the food and beverage industry, more than 4 times above average, according to the 2018 Forter's Fraud Attack Index. For restaurants that still haven't migrated to EMV point-of-sale equipment, risk of fraud is even higher.
Here's what restaurants should be aware of for credit card fraud protection, both for in-restaurant dining and for credit card fraud detection on online orders:
What the EMV Liability Shift Means for Restaurants
Since 2015, most merchants have been responsible for the EMV liability shift. This means that when restaurant diners use an EMV chip card to pay, and the restaurant is not equipped with EMV chip card point-of-sale equipment, if fraud occurs, the restaurant is responsible for the damages.
All credit cards that are issued today are EMV chip cards, and 97 percent of overall U.S. payment volume as of June 2018 was on chip cards, according to Visa. That places a significant responsibility on merchants to make sure their equipment is ready to handle those transactions.
EMV compliance is not required by law, but businesses that don't adapt put themselves at risk for having to pay for fraudulent charges. Fraudsters with stolen cards may target restaurants that they know don't have EMV chip card technology.
Best Restaurant Equipment for EMV PCI Compliance
To fully protect your restaurant, it's essential to adopt EMV chip card point-of-sale equipment. When using EMV cards at restaurants, diners insert their card into the card reader themselves – the server does not take it away from them. This practice is common throughout Europe and Australia already, where servers bring EMV chip card readers directly to diners at tables.
Implementing this practice is easy for restaurants in the U.S., too. Equipment like restaurant POS systems from North American Bancard feature EMV Tip Adjust, so diners can add on a tip at the table and verify that the total is correct. This helps reduce chargebacks, because diners are in control of payment and tipping, all in a single, simple transaction.
All your equipment and merchant services should also follow PCI compliance, which is a set of security standards to decrease fraudulent payments. These standards include building and maintaining a secure network and protecting cardholder data through encryption and tokenization. Using EMV equipment helps your business meet those standards.
Credit Card Fraud Prevention for Online Orders
Online orders and phone orders present other fraud risk factors for restaurants. If your restaurant partners with a third-party service like Uber Eats or DoorDash, card not present fraud is a risk, too.
To protect your restaurant and your customers, make sure to only partner with services that have credit card fraud prevention data security policies in place. Also, make sure the contract with the third party absolves your restaurant from liability if the application accepts an order with a fraudulent card. Otherwise, you may be held liable.
If you accept online orders through your own website, use virtual merchant account services that use end-to-end processing with encryption and tokenization. This way, customer details are never stored with your business, and customer data is protected through every step of payment processing.
Your virtual merchant account services should also ask for extensive cardholder data including billing address and card security code, to verify it is the cardholder who is placing the order using that card. You can go a step further and use multi-factor authentication, such as texting the customer a code they must input to complete the order.
Make the Dining Experience More Secure for Your Customers
The best way to provide credit card fraud protection for your business is to use EMV chip card technology and secure online processing. If a customer is paying in person with an EMV card and you have EMV equipment, the transaction should always be processed through dipping or tapping the EMV card, never swiping. If there is a customer who pays with a swipe-only card, and your business has an EMV chip POS system, your business is not held liable for any fraudulent charges.
When you use EMV chip card technology in your restaurant, customers can rest easy knowing they don't have to hand off their cards to servers to take away and potentially steal data from them. Plus, using EMV equipment to transact bills right at the table speeds up the transaction, which improves the dining experience.
Online, your ordering website should be secure, including using https:// security protocols. A non-secure site will warn your online customer that your site is not secure and that they should abandon it, which makes you miss out on sales and can decrease sentiment for your restaurant. If customers do proceed and make an online order, their personal information is vulnerable to hackers, all because your business failed to use secure virtual merchant services.
Whether you're in the business of fast food, quick-service casual or elegant fine dining, EMV chip card technology and secure virtual merchant services enhance the dining experience to make it more secure. To learn more about equipment that follows EMV compliance for your restaurant, take a look at our restaurant merchant services solutions.