From July, signatures will be abolished as it becomes mandatory for debit or credit card holders to punch in a four-digit PIN number to verify transactions. This means restaurant owners will need to invest in portable EFTPOS machines or ask diners to walk to the counter to pay rather than delivering the bill to the table for a signature. Industry leaders fear these moves may alienate diners, detract from the dining experience and make tipping a more difficult process.
The payment changes follow the Australian Competition and Consumer Commission (ACCC) giving the green light for credit card companies and banks to switch to chip-and-PIN technology in a bid to reduce signature-based credit card fraud.
R&CA CEO John Hart says the moves could adversely affect many of Australia’s 37,700 restaurants and their staff. “Several payment terminals provided by the banks and credit card companies are not chip-and-PIN compliant and they’ll come out of the market,” Hart says. “At the moment, the system is zero, or very low cost, but these terminals will no longer be usable. Operators will pay between $20 and $60 a month rental—and that’s if they have only one device. It’s likely up to three bills would be presented to customers at any one time and if the terminals need to go to the table, you need multiple terminals.”
Hart says many chip-and-PIN devices do not have tipping functionality and he suggests banks create a product which accepts gratuities as part of the transaction. “People won’t go out of their way to add a tip otherwise and how many restaurant staff rely on tips to keep them in the business?” he says. “This will end up putting more pressure on wage rates and business can’t afford that either.”
Hart says chip-and-PIN terminals in Europe without in-built tipping functionality were “not a good driving light for this country.
“There is no benefit to merchants, the only benefit is to the banks and their transaction security,” he says. “If there was a benefit to the operator, we would be more prepared to accept some or even all of the costs but there is none”.
Valerie McLean, owner of Bluestone restaurant and bar in Melbourne’s CBD, says the chip-and-PIN push was “another institution interrupting small businesses services.
“At Bluestone, wireless EFTPOS does not work so our customers will need to walk up to pay bills from the comfort of their table, decreasing our customer service,” she says. “This final impression of service is not the taste we want to leave in our customers’ mouths. Why does the bank have the right to dictate the conclusion of a Bluestone experience? We are not a fast-food venue.”
Bill Drakopoulos, managing director of the Aqua Dining Group, accepts the adoption of chip-and-PIN technology to cut credit card fraud but also worries about the effect on all-important tips.
“I mostly use table (payment) machines at my restaurants and there is no charge; they’re free, so buying equipment is not an issue from my perspective but if tips drop then it’s another hit to securing quality front-of-house staff,” he says.
“Security to card holders is paramount, having a PIN should be safer and I’d like to think tips won’t suffer, but if they do, it’ll be terrible for the industry.”
Justin Miles, general manager and executive chef of Adelaide’s Windy Point Restaurant, anticipates a reduction in tips for front of house staff.
“We believe that gratuities to our staff aren’t just a reward for service but a true indication of customer satisfaction for their experience across all facets of dining,” he says. “This may place pressure on future labour costs and could deter many from entering or continuing within the industry.”
Miles says carrying mobile EFTPOS terminals through the restaurant would detract from the dining experience and create extra labour loads.
“Many diners also prefer to be discreet in how the final transaction is carried out (and) this system will create an awkward environment for the server and the guest,” he says. “We can see in no way how this is of benefit to restaurants. We’ve had no issues with stolen or fraudulent transactions, and can’t see how the system will be of benefit. It will place extra cost and unnecessary discomfort on the overall dining and final experience which, as any restaurateur will tell you, is one of the most important relationship scenarios”.
Chef-owner Tony Carroll from Jolleys Boathouse in Adelaide says he’s already using the chip-and-PIN technology but hopes staff tips won’t suffer.
“I understand the awkwardness, though, in the waiter asking ‘do you want to tip?’ as it just doesn’t sound right and it’s unfortunate that this may affect waiters’ tips,” says Carroll.
Judy Shaw, director of corporate relations at Visa Australia, says the best solution for cafes, bars and restaurants is “pay-at-table” terminals with customers entering a PIN to verify their transaction. She says most merchants, including restaurants, rent the terminals from their bank.
“Most of these new terminals can display the amount that you are paying, ask if you wish to add a tip and often provide the option of adding a percentage or a dollar figure that you can choose,” says Shaw.