Will Restaurants Embrace EMV?

By Jim Roddy, VP of Marketing, RSPA

In an interview with Business Solutions, John Giles, president of Future POS, shares his views on EMV as it relates to the hospitality vertical.

“I’m in the restaurant business,” says Giles, “which kind of changes my view on it. But I think EMV is largely … can I say, ‘a load of crap’? It doesn’t protect the merchant. It doesn’t protect the consumer. It protects the card brands.”

EMV helps merchants guard against card fraud; because transactions with EMV cards embedded with a chip create a code unique to each transaction, stealing card numbers and making counterfeit cards would have no value to criminals. Giles cites a statistic presented during a presentation at the Retail Solutions Providers Association (RSPA) INSPIRE conference: only 9 percent of card fraud happens in restaurants. “It’s big-box retailers,” he explains, “If I get a stolen credit card, I’m going to go to Best Buy and buy a TV and sell it on eBay. I’m not going to go to the Subway shop and have lunch. They’re going to go for the most bang for their buck. They’re going to go for the biggest reward. They’re not going to go have lunch. The risk to a restaurant merchant is very minimal.”

Merchants who do not have EMV-enabled systems by the Oct. 1 “liability shift” date will be liable for fraudulent card transactions. He says comparing the cost of EMV technology, at about $400 a workstation, can be difficult to justify preventing the loss of a few $30 checks each year. “I could run for a lot of years, never embrace EMV, and still not be financially behind.”

Giles adds, “All that EMV does is shift your fraud from brick-and-mortar to the Internet because now I don’t have to have a card present. I can type in a number and an expiration date and buy whatever I want.” He says in Europe when EMV was implemented, card-present fraud was reduced virtually to zero, but e-commerce fraud increased. “You really didn’t gain anything. You just inconvenienced a ton of people to shift your losses,” he comments.

He says point-to-point (P2P) encryption, however, offers protection to the merchant, as well as the VAR and the customer. “As soon as your card is swiped, it’s encrypted. There’s no chance for anybody to steal it and it’s even more secure than I realized, “Giles says, again citing an INSPIRE presentation that, with P2P, if a cybercriminal cracks one encrypted packet from a swiper, they’ve cracked only one transaction. “Not one swiper, not one card, just one transaction. So what’s to be gained for these fraudsters is minimal — virtually nothing. It’s a ton of work with no return on their investment,” Giles comments. “If they see point-to-point encryption, they’ll just move on to somebody that doesn’t have it. Maybe someday that fraud changes as computing power gets bigger, but not dramatically because every transaction is locked down.”

To read the complete interview with Giles, see “Future POS’s Giles Talks EMV, Tablets, Reseller Relevance.”