The Tipping Point
Why the U.S. service industry is afraid of EMV
For many service oriented merchants, their standard tipping process has created the biggest obstacle for migrating to EMV. Tip adjustment, a practice unique to the U.S., caused many merchants to forgo EMV completely because they didn’t want to change the way they accept tips. And even if service based merchants decide to make the switch, many EMV implementations do not have tip adjust support.
With tip acceptance being an important part of the service industry, it was clear that tip adjust would have to be available through EMV. To meet the needs of the market, major card schemes have allowed for the authorization of tips of up to 20% with EMV. So, this means, the final settlement will include both the original amount and tip.
Currently, there are 3 EMV tipping models supported:
1. Tip Allowance
Tip allowance, also known as tip adjust, is the most commonly used method for table-service restaurants. The server takes the credit card to the cashier system and runs the card for the original transaction amount. The customer is given a receipt where they sign (which also counts as the authorization) and they have the option to leave a tip. If a tip is left, the server then adjusts the original amount and the total transaction is settled including the tip amount. The only difference for tip allowance pre and post EMV is that a maximum tip amount of 20% can be authorized.
There’s a growing misconception, that EMV specifications do not allow tip adjustments. Overall, there’s nothing against tip adjust as post-authorization of tips are fully supported. So why can merchants not automatically use tip adjustment? The problem actually lies with the card terminal. Many manufactures are only certified to accept simple EMV transactions where the authorized and settled amount are the same. Additional certifications must be completed before tip adjust can be used.
2. Counter Pay
The counter pay method can be seen a number of service related businesses including fast-casual restaurants and salons. With counter pay transactions, the merchant can input the sale amount and the customer will go through prompts on the terminal, one of which asks for a tip amount. The tip amount is then added directly to the total and the authorization is then completed for the full amount — initial plus tip.
3. Table Pay
Pay-at-the-table is a growing trend in the service industry. The process is basically the same as counter pay, except, the server brings the customer their receipt via a mobile payment terminal. The customer can then add the tip and complete the transaction directly at their table. Pay at the table is becoming popular among customers because it’s a faster and more convenient process. The waiting is eliminated which offers a better customer experience.
EMV Tip Acceptance
It’s still yet to be seen if EMV will encourage merchants and shoppers across the U.S. to change how they tip. But, with the growing demand for features such as Pay-at-the-Table, many customers especially in the restaurant setting are gravitating toward the faster, more convenient option of adding their tip directly instead of waiting to add the tip to the receipt.
With Payworks, developers of Point of Sale solutions can count on having not only a solution which supports EMV card acceptance, but also access to all tip acceptance checkout flows. By using the latest payment gateway technology from Payworks, you ensure that your merchants will have the most up-to-date solution available.
Making the transition to EMV can be a tedious, complicated process. Adding in the importance and necessity of tip adjust or tipping in general, it’s understandable why service-based merchants prefer not to make the move. Payworks has taken the headache out of EMV for you, so your merchants can also feel the ease of migrating to EMV.
Further tip adjust documentation can be found here for ioS/Android and here for Windows. Please note that tip adjust support is currently only available via TSYS.
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