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Some restaurants may find it cheaper to upgrade to a new POS than updating an existing system.

This Major MasterCard Change Could Be Expensive for Restaurants

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A shift in bin policies means many restaurants must pay for POS updates or face hefty fines.
By Andrew Szala July 2017 Expert Insights

Is your Point of Sale up to date? Many restaurateurs are finding themselves forced into paying for expensive new versions of their Point of Sale (POS) operating systems this month, due to MasterCard’s BIN 2 update. On June 30, 2017, MasterCard issued changes concerning its bank identification numbers. These bank identification numbers (BIN) are the first six numbers of individual accounts and vital to processing as they ensure proper payment routing by identifying the issuing institution.

As the digital payments landscape continues to evolve, MasterCard’s intent is to be able to grow alongside it by providing support for new features, such as digital wallets and e-commerce. MasterCard plans to issue 50,000 new numbers in an attempt to double their available accounts and enhance digital payment security. The previous BIN model started with the number five, which had been in place since the 1960s. This new series will now start with the number two and run between numbers 222100-272099.

While most restaurateurs won’t be impacted during the course of their day-to-day functions, some will need to update their Point of Sale to ensure the version they have in place can support this new BIN series. Restaurateurs with legacy Point of Sale systems are bearing the brunt of these changes, leaving many scrambling to confirm that their version is modern enough to support the new payment method. Upgrade costs can be substantial, though the POS system itself should remain otherwise wholly functional. Some restaurateurs are actually finding it cheaper to rip out and replace their legacy Point of Sale for a cloud-based system rather than front the bill for the update.  

Restaurateurs who choose to ignore these new updates find themselves facing steep fines should they be caught noncompliant, some upwards of $25,000. Further, MasterCard has deployed secret shoppers to the field in an attempt to test compliance. Users who fail this field test may be charged the full amount for noncompliance every month until the necessary upgrades take place. While many will no doubt find not only the updates, but also the threat of fine worrisome, MasterCard has indicated that 30-day extensions are available.

Other restaurateurs may already have updated systems in place but are encouraged to reach out to their current Point of Sale company as a precaution. Micros 3700 users needed to have version 5.2 or greater in place by the June 30th deadline, while Hypercom terminals will need to be replaced entirely before processing with MasterCard may continue, as the manufacturer declared the terminal had reached end-of-life on April 1st, 2017 and therefore is ineligible for update.

Internal and external loyalty programs may also be impacted by these changes, so restaurateurs using loyalty and rewards systems should reach out to their respective loyalty companies support divisions to ensure there will be no lapse in tracking. Further, MasterCard is encouraging those restaurants utilizing analytics software in conjunction with non-cloud based points of sale to not only reach out but test their software to guarantee a smooth transition. As an added precaution, MasterCard encourages restaurateurs to test their systems via their service provider, POS company, or by emailing 2series_test_cards@mastercard.com.

There is some good news for restaurateurs already using newer technology for their credit card processing. Users who have upgraded their payment terminals to support EMV chip card technology are largely supported and will not require an update to the payment portal itself, as the changes slated to take effect with MasterCard BIN series 2 and the implementation of EMV have developed concurrently.

As this is the latest but by no means last BIN series change on the horizon (the credit card industry is also considering moving from a 6- to an 8-digit BIN), many restaurateurs are probably questioning whether legacy based systems are truly worth the investment going forward. Restaurateurs with questions concerning their current eligibility for MasterCard BIN series 2 should reach out to their current Point of Sale provider and credit card processor to ensure they are fully compliant. They can also contact MasterCard by emailing BIN_Inquiries@mastercard.com.

Andrew Szala is with Upserve, one of the largest and fastest­-growing companies in the restaurant technology space. Upserve’s restaurant management system offers a complete suite of solutions purpose-built for restaurants. Upserve's system also includes Breadcrumb POS by Upserve, the industry's strongest cloud-based restaurant management point of sale.