Is this the death of tipping? Restaurant owners warned the move to credit card PIN codes will hurt their takings

  • From Friday, August 1, all cardholders will need to input PIN codes
  • Signatures scrapped in a bid to boost security and stamp out fraud
  • Restaurant owners warned they may lose tips to automated process

By AUSTRALIAN ASSOCIATED PRESS

Published: | Updated:

Credit card companies may inadvertently deprive restaurant staff of their treasured tips.

From Friday, all cardholders will need to punch in their PIN codes when they pull out the plastic.

Signatures are being scrapped in a bid to boost security and stamp out fraud - but the move could have some unintended consequences for the nation's wait staff.

New research by EFTPOS provider Tyro Payments found that PIN usage at small-to-medium businesses has increased from 59 per cent in November 2013 to 78 per cent of payment transactions in 2014.

Restaurant owners have been warned that the automated nature of processing credit card payments with a PIN will mean they miss out on tips

Restaurant owners have been warned that the automated nature of processing credit card payments with a PIN will mean they miss out on tips

From Friday, August 1, all customers will have to use a PIN code if they choose to pay by credit card
Signatures are being scrapped in a bid to boost security and stamp out fraud - but the move could have some unintended consequences for the nation's wait staff

From Friday, August 1, all customers will have to use a PIN code if they choose to pay by credit card. Signatures are being scrapped in a bid to boost security and stamp out fraud

But eating outlets have been the laggards in the change, with only 66 per cent reporting PIN usage.

And Tyro Payments co-founder Andrew Rothwell warns the change could spell the death of tips from grateful customers dining at Australia's 37,700 restaurants, cafes and pubs.

That's because when signing for the bill customers can insert a tip at the bottom of their credit card transaction.

But typically with PIN transactions, the amount is locked in at the front desk when staff key in the details.

'Imagine cardholders searching in panic for cash to offer a tip, because they can no longer offer this as part of the signature process,' Mr Rothwell said in a statement.

It could see the end of tipping, a key source of income for restaurants and their staff. Tips are expected to fall by double digits, similar to the experience in the UK when signatures were phased out.

Mr Rothwell is urging restaurants to switch to mobile technology that allows patrons to use the EFTPOS terminal at the table and to be able to nominate the amount they want to pay and tip.

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