Adjusting Tips Using EMV Chip Card

​Introduction

For a lot of service-oriented merchants, the biggest obstacle for migrating to EMV is their standard tipping process. Tip adjustment is a practice that caused a lot of merchants to forgo EMV transactions because they do not want to change how they accept tips.

Tip acceptance is a vital part of the service industry, and to meet those market needs, major card schemes allow for the authorization of tips (up to 20%) with EMV. This means that the final settlement will be a total of the original amount and the tip. Adjusting tips using EMV chip card is becoming a necessary process for all businesses in the service industry.

How EMV is changing the way we tip

EMV is absolutely changing the way we tip, but despite the initial confusion, it doesn't have to disrupt the normal tipping process.

While restaurant goers the US over have been experiencing a pretty consistent tipping process up to now (that is, give your server your card, wait for your receipt, sign, and add a tip if you desire), the introduction of EMV payment technology has sparked concerns from those in the service industry who would have to ditch this form of payment in favor of more commonplace models in other EMV environments.

The first thought was that EMV would dismantle the whole process since the entire transaction takes place at the table. As full-service restaurants started to make the transition to EMV, potential problems in tipping changes started to emerge. The EMV terminals didn't give users the option to provide a tip adjustment.

This was a blow that threatened to mess up the payment practices of restaurants that were accustomed to processing tips based on their paper receipt information. But, the normal paper slip tipping method that may are accustomed to doesn't have to change unless that is what merchants want.

There's nothing in the EMV specifications which prevents a restaurant from accepting tip add-ons when customers use EMV cards if that is what they normally do.

How the process of tipping changes with EMV chip cards

Some EMV chip card machines don't allow the addition of a tip after the card has been run (a process known as dipping, for EMV cards). Also, some processing companies don't permit any tip adjustments after the card has been run. This means that if you use any one of those machines, then you must change your entire tipping process.

The current process to tip with a credit or debit card in a restaurant typically unfolds as follows:

  • A bill is brought to the customer by the server
  • The customer gives their credit card to the server
  • The server then takes the card and goes to swipe for the meal at the terminal
  • The server returns with a receipt for the customer to sign
  • The customer has an option to add a tip, after which they sign the bill
  • Afterward, the restaurant adjusts the transaction amount to show the original amount and the tip.

With some EMV chip cards, this final step won't be possible which means that the server wouldn't receive money from tips that are written on receipts after the cards have been dipped.

Why you should change your tip process even if some cards will still work

Is there really any need to change your tipping process if some cards still work? Well, the biggest reason to change your process of tip acceptance is just to ensure that you can process the transaction with a tip no matter which card is used. If there is a particular payment that you can't process, you might not realize it until after the customer has left. This means that you will be unable to correct the issue which would result in loss of money for your server.

There are a lot of businesses that report losing out on tips paid using EMV chip cards simply because they did not know that the procedure might not be the same. Accepting tips the traditional way may still work with some EMV chip cards and processing companies, but there's no guarantee that it will work with all of the cards.

So, in order to avoid confusion (and anger) over the loss of tips, it's best to change your tipping process before encountering such situations. Check with your payment processor to clarify if you're not sure whether you can perform EMV tip adjustments.

Adjusting Tips Using EMV Chip Card

While the procedure of accepting tips with EMV cards is simple and uncomplicated, it can vary by card type which means that you may find contradictory information on EMV solutions. This is why it's best to implement procedures that work for all card types to help minimize customer and staff confusion.

Sit-down restaurants can accept tips from customers who pay with EMV chip cards in two ways without changing the procedure for different cards. However, both these options call for a change of the current processes of tipping that both servers and customers are accustomed to.

This means that there may be some initial confusion as staff and customers adjust to the new methods of tipping with EMV chip cards, so you should be ready to explain the reasons for the changes.

Two Ways to Accept Tips With EMV Cards

  1. ​Tableside payment
  2. Add tips before dipping card

How to Use Tableside Payment Equipment

The wireless machines used for processing debit and credit cards are what is referred to as tableside payment equipment here. These can be physically carried to the customer's table. The machines allow the EMV chip card to be dipped in the presence of the customer, then hand the terminal to them so that they can input the tip amount with the chip card still in the machine.

This type of payment option also offers customers extra security as it is safer than letting their card leave their sight.

Add Tips Prior to Dipping the Card

The second option for accepting tips with EMV chip cards at a sit-down restaurant is to ask the customer to add the tip before processing the transaction. The server could do this by printing out a copy of the bill so that customers could write the amount for their tip and the total amount on the slip. He would then take the EMV card and receipt to the payment terminal as usual to process the transaction.

Afterward, the card would be returned to the customer together with the receipt (which already includes the tip in the total) for the customer to sign.

EMV-capable terminals offer an option for customers to add tips while the card is still in the terminal for take-out and quick service restaurants. The terminal can be handed to the customer or they can use customer-facing equipment.

Because most take-out customers are already used to signing for their transactions or entering their PIN at customer-facing terminals, this change in procedure for tipping with EMV cards is unlikely to be disorienting for them.

Tip allowance using EMV chip cards

Tip allowance, also referred to as tip adjust, is the primary method that is used at sit-down restaurants. It allows payment to be processed away from the table, either by swiping or dipping the card (whichever technology the card supports).

A receipt showing the original amount is printed which the cardholder then signs to authorize the transaction and if the customer so chooses, the tip. Later, the total transaction is then settled by the cashier to include the tip amount. The only real difference for tip allowance before and after EMV is that the maximum tip amount that can be authorized is 20%.

Conclusion

The bottom line is that the tipping evolution will go on. Adjusting tips using EMV chip cards is a process that is becoming more and more popular with merchants in the US. If you want to ensure the smooth transition for your business, then it's worth your while to educate yourself and your staff on all the aspects of accepting EMV chip cards.