or insult your customers, who will get the impression you
don’t trust them. It’s also time-consuming. My pizzeria
does about 1,000 deliveries a week, and 85% of customers
pay with a credit card. Even if every customer had his card
ready to present to the driver, I estimate it would take an
additional 15 seconds to obtain the imprint, adding about
four hours a week to our drivers’ delivery time. Additionally, credit cards with raised or embossed numbers are
going the way of eight-track tapes, thanks to online credit
card processing and the increased security of chip cards.
The switch to EMV negatively impacts pizza delivery.
Face-to-face transactions aren’t nearly as much of a problem—most criminals don’t want to stand face-to-face
with their victims. In more than 10 years of business,
Precinct Pizza has dealt with only two or three chargebacks from face-to-face transactions, and I believe most
of them were from customers simply trying to get a copy
of their receipt. Delivery orders, however, which are all
done by manual entry—either over the phone or by the
customer online—have recently become a nightmare for
In our first 10 years of business, Precinct Pizza pro-
cessed more than $16 million in credit card transactions
and lost only a few hundred bucks in fraudulent delivery
transactions. But we have seen a huge increase in delivery
fraud recently. From October to December 2016, we dealt
with 57 fraudulent transactions, resulting in more than
$4,000 in chargebacks, all leading to losses for Precinct
Pizza. And that’s not even counting the $20 our credit
card processor charges for every fraudulent transaction.
Some processors charge more than that, up to $60 per
So what’s the solution? One company offers credit card
readers that can be used with smartphones for magnetic-strip or chip cards. But unless you use that company’s
POS system, it may be difficult to reconcile your books
each day. I don’t think you should buy a POS system
just for this feature. Your pizzeria’s POS system should
be designed with pizza in mind.
I came up with my own custom features and then
worked with my POS provider to tweak our system. All
of our fraud occurs on delivery orders, and nearly all of
it occurs with customers who have never ordered from
us before. These customers have zero lifetime orders registered in our POS system. There were a couple of exceptions in which criminals placed multiple orders before
we caught them, but the single common thread in these
fraudulent transactions is the customer’s lack of history
with Precinct Pizza. Each one had zero lifetime orders
when they started using fraudulent credit cards to buy
pizzas from us.
With this information in mind, I contacted my point-of-sales system provider and presented my ideas about
how to prevent fraud in the future. My POS company
has always been open to my suggestions about feature
improvements and has implemented many of them for
me, with others still in the works. On the following pages,
I will detail the POS-related changes I recommend.
All of our fraud occurs
on delivery orders, and
nearly all of it occurs with
customers who have never
ordered from us before.
After the implementation of the
new EMV system, Precinct Pizza
began seeing a huge increase
in credit card chargebacks on