From chip, to sign, to pin, to dip – it’s easy to get lost in the vocabulary pertaining to the various elements that affect your restaurant’s payment processes. But as a restaurant owner, it’s crucial you know the difference between the two; when are you held accountable? When is the customer? Where do you draw the line?
Below we’ll demystify the grand chip and PIN and dip and sign debate.
Opponent #1: Chip and PIN
Chip and pin – also known as an EMV card – has become the standard for payments basically everywhere, apart from, you know, the United States. The process is simple and the benefits are obvious. First, you insert your card, enter your pin and then boom – done. Why so simple you ask? The electronic chip within the card has the card owners pin encoded in it, which acts as a mechanism of personal identification.
The simple process of chip and PIN benefits both you, the restaurant owner and the cardholder. While there is more liability put on the cardholder with a chip and PIN card – since it’s up to them not to share their PIN code with others – the ability to quickly make a payment without their card ever leaving sight, far outweighs the downside of the transfer in liability. Meanwhile, you, the restaurant owner, benefit from the reduced liability that comes with this technology.
Opponent #2: Dip and Sign
The vernacular, dip and sign, describes what has come to be the US’s approach to an EMV solution. Instead of a chip and PIN card, U.S. consumers have something a little different. Behold, “chip and signature” cards. These cards have consumers “dipping” their cards into the slot underneath the credit card processor's keypad. After the dip, you’re not done yet – you’ve got to sign on that dotted line to complete the transaction.
While the dip and sign method is a step towards “secure-er” methods, it’s not the “secure-ist”. Security experts believe the PIN system to be the safest option, since there’s another step required for the cardholder to verify their identity. In a perfect world, a signature would be enough, but how many merchants are taking the time to verify every single customer’s signature matches the signature on their ID? Odds are, not many.
Although some business owners aren’t pleased at the thought of having to upgrade their POS system to one that accepts chip and pin cards, the PIN component offers an added benefit that a customer’s signature cannot – you’re off the hook for fraud costs. Before, if you didn’t verify the identity of a customer, you very well could be held accountable when it comes to covering fraud costs. Now, you won’t be responsible for the fraud that lovely little chip helps prevent.
So...United States vs. Everyone?
So why is the U.S. so hesitant to join the chip and PIN game, you ask? Well, to be fair, Canada was actually early to adopt the chip and PIN method, thanks to Interac’s great relationship with Canadian banks. As a result, the push for this new technology in the Canadian banking system was welcomed with open arms – and favorable rates.
The U.S.’s delay in joining the chip and PIN party can be traced back to the fragmentation of their banking system; more banks make for more opinions, and ultimately, more pushback. Because of this segmentation and unwillingness, the US has been slower to agree to a common standard than their Canadian counterparts, which has lead them to take this dip and sign “half measure”.
While there’s no true “winner” in this face off, apart from the United States, a lot of the world is standardized to the Chip and PIN approach. Why? You obviously know by now; Chip and PIN transactions put more onus on the card holder, meaning the merchant’s liability for fraudulent charges is significantly reduced. So whether you’re “dipping” or “chipping”, make sure you know where your liabilities lay and proceed – processing – with caution.
About the Author
Jackie is a Content Marketing Specialist and Social Media strategist at TouchBistro. She covers the latest food, dining, and technology trends for the restaurant industry. A lover of all things coffee, Jackie’s hobbies include breakfast, lunch and dinner.More Content by Jackie Prange