Mobile Payments: Innovation for Improved Efficiency and Customer Convenience

February 4, 2016         By: abarrotti

Ready or not, consumers will expect mobile payments as a convenience in the years to come. It’s a hot trend that is carving a niche in buying behavior and capturing the interest of restaurant patrons – especially with so many being less tolerant of long waits to pay their bills after they complete a meal.

A mobile wallet is a payment mechanism that can be used from an app on a mobile phone or tablet. Consumers can sign up for a mobile wallet account online and link their charge cards, debit cards, and bank accounts. Customers can then download the mobile wallet app onto their mobile phones or tablets and use it to securely pay for goods they wants to purchase at stores where that mobile wallet is accepted as a payment method.

PayPal now provides a mobile wallet. Google Wallet and Apple Pay are other prominent brands pioneering the mobile wallet space. Many large retailers, like ToysRus and Starbucks, now also offer mobile wallet apps for when their customers want to make purchases on their mobile phones or devices while on the go.

To pay with a mobile wallet, the customer simply opens the mobile wallet app on his smart phone or tablet. He then confirms his identify by entering a PIN/Password or Fingerprint, selects the card or bank account he previously set up in the mobile wallet that he plans to use for the current transaction, and chooses any special offers or customer reward programs he wants to apply.

To transact a mobile wallet payment in-store, the customer taps his device on the payment terminal. The payment terminal could be a pin pad at the checkout register, or another mobile phone, or a tablet brought to the customer while waiting in line or at his dinner table. Mobile wallets use near-field communication (NFC) chips inside mobile smart phones and tablets to transmit payment information. Both the phone/tablet and the payment terminal need to be NFC (Near-Field Communication) enabled. NFC Terminals are prevalent all over the world, but restaurants and stores in the U.S. are just starting to upgrade their payment terminals to incorporate NFC technology.

All newer versions of iPhone and Android phones have incorporated NFC capabilities. As consumers tend to upgrade their phones every couple of years or less, expect to see a considerable upswing in the use of mobile wallets and NFC “tap and go” payments in the next few years.

Ideally, a restaurant’s Point-of-Sale (POS) solution not only has mobile capabilities, but is also integrated with the top mobile wallet apps available today. Some POS solutions available on the market today integrate directly with mobile wallet apps that do not even require an NFC payment terminal to transfer payment. POS solutions should be easy to upgrade so integration with new mobile payment systems can be done rapidly without an expensive service call. If not, now is as good a time as any to begin researching a POS solution that is current in terms of features and functionality, and offers you the most advanced technologies.

Restaurateurs with an integrated mobile solution – mobile POS, mobile wallet, mobile/online reservations, and loyalty program – can implement an exceptional level of operational efficiency and customer experience not possible prior to the availability of these technology advancements.

With the right apps installed on their mobile phones, restaurant patrons can make a reservation, see what they are ordering – whether they are in a restaurant or placing a pick-up order online – see the itemized cost of their meals in real time, pay without having to wait for a check from the wait staff, and apply any customer loyalty points earned at that venue – all with a few taps on their mobile phones.

Here is a real world example: Harry just got off work and is hungry. He feels like having Italian but doesn’t want to wait around for a table at the usual place he goes to. He opens the Open Table app on his mobile phone, finds an available table at a nearby little restaurant he’s been meaning to try, and makes his reservation. He gets to the restaurant and the hostess sees Harry’s Open Table reservation and seats him right away, using the seating chart in the restaurant’s mobile POS system. Harry’s information is electronically transferred from Open Table into the restaurant’s POS system with a message to the server that Harry came in from Open Table. At the same time, Harry receives a message on his iPhone asking him if he will want to pay for his dinner with his Open Table mobile wallet. Harry confirms YES on his phone.

The waiter welcomes Harry, tells him about the specials for the day and enters Harry’s order into the POS solution on the iPad he has carried to the table. The order is transferred instantly to the kitchen for preparation, and at the same time shows up on Harry’s iPhone with the total cost. Harry also gets a notice on his iPhone that the restaurant has a loyalty program, which offers a free bottle of wine after two more adult dinners within the next year. Harry decides to enroll in the loyalty program on his phone while he waits for his dinner.

Harry loves his dinner, especially the fresh, homemade pasta. The restaurant is busy and he is in a rush to get home, so he looks at his bill in his Open Table mobile wallet, adds a generous tip for the great service, and says thanks to the hostess as he leaves to go home. The waiter notices that Harry’s table has been cleaned up by the bus boy and new patrons are being seated. He checks his iPad and the POS app lets him know that Harry paid so the waiter doesn’t worry about chasing a dine-and-dash patron. He is happy with the great tip he just received. He is also pleased he doesn’t have to spend the time running around with the bill and processing Harry’s payment, and he can go on to serve the next customer a lot sooner. His next customers are particularly pleased by the promptness of the service they receive.

Apple Pay and PayPal mobile wallets do not yet integrate with restaurant POS systems to the degree Open Table does. Still, payment processing is much faster when these mobile wallets are used as printed bills are not required. With a mobile wallet, nobody has to run around to pick up credit cards or wait in line for them to be processed then return the card to the customer with a receipt requiring signature.

If Harry had an Apple Pay or PayPal mobile wallet, the waiter would have brought his iPad-based POS solution over to Harry to pay the bill. Harry would chose the payment method in Apple Pay or PayPal on his mobile phone, tap his iPhone on the POS system held out to him by the waiter, and a secure payment would instantly transfer to the restaurant without revealing any credit card or banking information. Both Harry and his waiter would have been pleased with how much faster it was to securely process his bill payment. Faster payment processing means faster table turnovers.

While the uptake of mobile wallets by consumers has been slow, Millennials lead as first adopters and 32% percent report they will be using a mobile wallet within the next year, according to a FICO survey. In discussions, first adopters usually say that although they were initially skeptical about using a mobile wallet, they rapidly got hooked on the added convenience

This new technology doesn’t mean all the old, established payment methods are going away. But there is a major cultural transition occurring right before our eyes that can’t be ignored by any restaurant that wants to avoid getting lost in the transition.

At some point, in the not too distant future, the general consumer population will demand the added convenience of this mobile model. It will become just as commonplace as making a purchase on the Internet is today. Restaurants that flourish in the future will certainly offer patrons the exceptional customer experience the latest technologies can provide.

About the Author:

Alex Barrotti, CEO and Founder of the TouchBistro iPad POS Solution for restaurants and bars, has a long history with emerging technology. Before TouchBistro, he founded INEX Corporation in 1997, a company that was at the forefront of e-commerce development and featured a software solution that helped storeowners create online storefronts with pre-designed templates. After selling INEX in 1999 for $45 million, Barrotti continued to use his experience with design and development by creating TouchBistro. Barrotti has emerged as a visionary in technology trends that create demand, first with online shopping, now with mobile POS and payments.