Restaurants and cafes bear the cost of credit card PIN switch-over, but retailers welcome the change

Signing for your credit card purchase is no longer an option in Australia, with the switch to PIN-only purchases being ushered in today.

While business owners and consumers have had months to prepare for the change-over, the switch has come at a cost to some SMEs in the hospitality sector who have been forced to stump up for extra payment terminals to accommodate for the change.

John Hart, chief executive of Restaurant and Catering Australia, told SmartCompany for many cafes and restaurants, the change-over means investing in “significant amounts of new hardware to make it work, as well as additional software”.

Harts says small cafes and restaurants have previously paid between $20 and $40 for the use of one electronic payment terminal at their front counter, with service staff able to collect signatures on bills from patrons sitting at their tables.

However, under the new system, venues will need multiple terminals to take to the tables, potentially increasing their monthly costs to $200, says Hart. On top of this, the software on existing terminals may also need to be upgraded, which also comes at a cost.

While some banks have offered merchants discounts on the new machines to ease the pain, Hart says his members are upset that they are being asked to pay for a change that will only benefit the banks.

“There is very little benefit for the merchants,” says Hart. “They are already paying merchant service fees but now they are being asked to cough up more to save the banks the cost of fraudulent behaviour.”

Hart says some venues may also see a drop in tips from customers, but this will depend on how their payment system is set up. In cases where the payment terminal prompts a diner for a tip, Hart says there could in fact be an increase in tips for wait staff.

Hart says business owners do have other choices when it comes to payment systems, including using payment platforms such as Tyro and PayPal, but he says these systems can often charge higher service fees than the banks.

But Russell Zimmerman, executive director of the Australian Retailers Association, disputed Hart’s claims of higher costs, telling SmartCompany many businesses rent their terminals from the banks and so all they need to do is approach their bank to upgrade the software for them.

While Zimmerman concedes retailers won’t need to increase the number of terminals in their stores as a result of the switch-over, he says a PIN-based system could save all businesses for bearing the cost associated with fraudulent transactions.

“They need to realise this is a far more secure system than using a signature-based system,” says Zimmerman, who says it can sometimes take weeks for a retailer to discover they have handled a “hot card”.

Zimmerman says the change-over has been talked about for two years and it will take a number of months for the 800,000 card terminals across Australia to be upgraded.

He says some consumers will continue to have the ability to sign for purchases, including people visiting Australia from overseas and those who are blind or suffer from memory loss.