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Is Tipping As We Know It About to Change Entirely?

New microchip credit cards could change the way you tip at restaurants.

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The old tipping ritual as we know it could soon be dead. Thanks to new microchip credit card technology that's being implemented across the U.S. as we speak, the practice of writing in a tip on a paper bill is potentially poised to become extinct.

According to Quartz, "Under the new system, American chip card users will be presented with a handheld card reader at their table, asked to either sign or enter a four-digit code to verify their identity, and given tip options on-screen." That's right — instead of being left alone to write in a tip at their leisure, customers could be forced to select how much they want to tip with their server hovering over them.

Tipping 20 percent or more will become the path of least resistance.

Eater critic Ryan Sutton thinks the new system will have a positive impact on restaurant workers' tips: By helping to automate the tipping process, "it will raise average gratuities in in the same way that pre-set tipping suggestions help out taxi or Uber drivers; by making it just ever so more mentally taxing to tip less than the listed pre-set amount," he says. "Tipping 20 percent or more will become the path of least resistance."

CNN Money explains the new card technology: "These new cards look similar to your old credit cards, but now have a small metallic chip on the front. Think of the chips —called EMV microchips — as mini computers. They hold your payment data, which is currently held on the magnetic stripe, and provide a unique code specific to each purchase." The new cards will in theory make credit card fraud much more difficult; the move follows numerous high-profile, large-scale data breaches at retailers like Target and restaurant chains including Chick-fil-ADairy Queen, and P.F. Chang's.

The switch to microchip cards is industry-wide, and the deadline for businesses to begin using the new card readers — which hold onto the card for the duration of the transaction, as opposed to the old swiping process — was October 1. That doesn't mean the new system is already in place everywhere, though: Quartz says that the deadline is simply intended to push merchants into embracing the new technology, as "those that don’t upgrade their equipment will be liable for any card-related fraud in their stores" following the deadline.

The Verge notes that "While this would seem to be incentive enough for merchants to get on board with chip cards, it hasn't worked as well as expected. Major retailers like Wal-Mart and Target are ready for the transition, but according to a study conducted by Randstad Technologies, only 58 percent of merchants would be able to meet [yesterday's] deadline."

It would stand to reason that while smaller, independently-owned restaurants might be resistant to embrace the new pay-at-the-table system, large restaurant chains would be more apt to do so, with more locations and a much larger customer base making them more vulnerable to fraud.

"For many restaurants the choice will come down to, do we want to be potentially liable for fraudulent charges that occur on our premises?"

"For many restaurants the choice will come down to, do we want to pay for new terminals that accept this new card technology (which is actually 10 years old), or do we want to be potentially liable for fraudulent charges that occur on our premises?" says Micah Singleton, technology reporter at The Verge. "I think restaurants will begin to shift en masse next year as more customers receive chip-enabled cards from their banks. Right now, chip-enabled cards aren’t ubiquitous, but that will soon change, and then the liability for fraud may fall to the merchant who hasn’t made the transition yet."

Reached for comment by Eater, a rep for Pizza Hut said the chain "will have new systems in place for the chip cards at all of its 6,300+ locations by no later than next July." The company says the new system won't change the way its customers tip. The Cheesecake Factory, Chili's, and Olive Garden did not immediately respond to requests for comment; Esquared, the restaurant group that operates BLT Steak, had no comment, while steakhouse chain STK said it couldn't comment because it's not currently utilizing the technology.

While many consider the U.S. tipping system to be antiquated, it's on the brink of major change in more than one regard: As many cities across the country implement minimum wage increases, a growing number of restaurants are experimenting with no-tipping policies — implementing menu price increases or mandatory service charges instead — as a way to mitigate rising labor costs.

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