What You Need To Know About EMV Tip Adjustments

Given the rapidly changing merchant processing landscape for restaurants in the United States, it’s vital restaurant owners understand how this will impact adjusting for tips at the time of payment.

It has been well over a year since the original EMV deadline of October 1st, 2015 so we’re well into the post-EMV liability stage. Many merchants have now started to implement EMV compliant payment systems in their businesses and consumers are becoming more familiar with EMV payment methods.

Progress making the EMV implementation has been steady but many merchants are yet to make the upgrade. We think that this is partly because there is so much misinformation out there about EMV compliance and implementation still. One such area that is full of misconceptions and misinformation is tipping in restaurants.

EMV Tip Adjustments

Tipping is an area that’s going to change with full EMV implementation but it’s not as complex as it seems. Many merchants feel confused about tipping given the changes brought about by EMV implementation. Some of that confusion lies with misunderstandings about when to include tips in the final payment amount. Other merchants don’t understand whether or not they should apply tips to the final bill of a signed receipt.

These questions and conundrums leave many merchants feeling confused so we’re going to answer them once and for all in this post.

How Tipping In An EMV Environment Works

EMV tip adjustments seem complex but it’s actually quite easy to understand.

Here is the simplest explanation. It all comes down to how you verify your payment method.

If you’re authorizing your payment via a signature on the receipt then tips can be adjusted for after the customer has paid, just like it is today. Verifying your payment via chip and pin using a pay at the table solution requires you to include tips in the final authorized amount. 

If you verify your payment using a traditional EMV enabled chip card reader that uses chip and sign, then tips can either be included in the authorized amount or adjusted for later.

As you can see above, the last two payment methods we mentioned required chip and pin to make the payment. The key thing to remember is that whenever using chip and pin, the PIN is acting to verify that amount. This is why you need to include tips at the time of authorization.

However, with signature, the signature acts as the verification, and the receipt can be signed after the customer has paid with the tip included to authorize the tip adjustment.

That is how EMV tipping in restaurants works in a nutshell. The most important way to determine EMV tip adjustments is the payment method.

How Restaurant Merchants Can Prepare For This Change

Restaurants only need to prepare for this change if they adopt EMV compliant payment systems in their business. If you’re not using EMV compliant payment terminals or a pay at the table solution then these tip adjustment factors won’t affect you. You can continue adjusting for tipping just as you do now.

We know some merchants prefer this and won’t want to change their current processes. However, we must warn that with the changing landscape comes a change in what consumers demand and expect. And consumers are going to start expecting restaurants to take their EMV chip card.

Furthermore, EMV compliance gives your business that extra layer of security. Additionally, it’s also a guarantee of extra protection for your customers.

It’s something you should strongly consider giving the fast changing landscape of merchant processing in the United States.

To find out more about EMV compliance then get in touch with us today for your free EMV assessment.