A mid-year checkup
There is a lot of change happening in the payments world –and mid-year is a good time for a checkup on your payment technology and strategy. Working on the front lines with full-service restaurants (FSRs) across North America, I’ve seen what businesses are doing well, where they are still struggling, and developed this list of trends they can’t ignore.
- Continued EMV adoption, and the addition of chip & PIN cards: The EMV migration is underway, but merchants and consumers still have a long way to go. Many mid-sized merchants still have yet to enable EMV capabilities. Based on our experience driving EMV migration in other countries around the world, Ingenico Group expects that slow roll to continue, and also anticipates that some card issuers will begin to transition to chip & PIN EMV cards in late 2016, a process that will take 2-3 years. If you haven’t yet enabled EMV in your restaurant yet, it’s time to do so – and we recommend a Pay-at-the-Table model (see below). If you have already enabled EMV, assign someone on your team to begin understanding how you would accept PIN-based transactions.
- Pay-at-the-Table will soon be common in the US: This is particularly relevant to FSRs. Pay-at-the-Table technology is already standard in other developed countries, and that’s mostly due to EMV. In an EMV world, it is best practice for cards to never leave the customer’s possession during a transaction. In the U.S., an additional driver is mobile payment solutions, such as Apple Pay, which require either a fingerprint ID or PIN to verify the transaction. The payment method can’t come to the POS—customers aren’t going to turn over their PIN or smartphone—so the POS has to come to the customer. Ingenico Group is already seeing strong demand for Pay-at-the-Table solutions in the U.S. and believes this market will see substantial growth across all hospitality categories in 2016 and 2017.
- Multi-layered security solutions are becoming the norm: Major card data breaches in late 2014 and 2015 caused merchants to re-think their security approaches. In 2016, we have begun to see many merchants successfully implementing multi-layered approach that incorporates point-to-point-encryption (P2PE) and tokenization in addition to EMV. Further, the PCI Standards Security Council and analyst firms, such as Gartner, recommend PCI-certified solutions for merchants who are implementing P2PE. These solutions are implemented in both traditional in-lane environments as well as mobile point of sale (mPOS) solutions that bring the point of sale to the point of service using tablets and phones.
- More mobile payment options are emerging: Today, the predominant mobile payment solutions are Apple Pay, Android Pay and Samsung Pay, but it seems there’s a new market entrant every week, including bank-specific solutions, such as Chase Pay and Wells Fargo’s recently announced mobile wallet. Newer features include loyalty program integration to help drive stronger customer engagement and the ability to accept coupons. FSRs don’t need to accommodate every wallet type, but should make sure they’re meeting customer needs and preferences by supporting the ones their customers want to use.
- EMV transitions are now typically following a semi-integrated model: EMV transitions are so complex because new, more detailed, communications must be implemented at every touchpoint for card data within the POS infrastructure and any changes to this infrastructure can affect PCI compliance. Semi-integrated solutions prevent card data from entering the POS—instead, it is encrypted and routed directly from a secure smart terminal to the merchant’s card processor or gateway. This enables merchants to quickly and easily integrate with payment devices and isolate payment processing, therefore helping to reduce their PCI compliance scope.
- mPOS adoption is soaring: Over the last three years, research and experimentation including mPOS has occurred across the industry as part of a solution to bring the point of sale to the point of service. Until this year, mPOS has been perceived by some as a strategy for micro merchants and SMBs. In 2016, larger merchants have confirmed real ROI on their mPOS investments, including faster checkout, shorter lines, increased upsell and cross-sell opportunities and the ability to create pop-up events in high traffic locations.
- Omni-channel payments are becoming real: More restaurant merchants are looking for ways to differentiate themselves by allowing customers to pay in multiple ways using multiple channels. Restaurants are enabling customers to start an order in one channel (such as via mobile device) and finish it in the restaurant. The objective is to stay connected to consumers throughout the entire purchase journey, whether in-store, online, or on mobile devices. Merchants are researching how to advance this experience by learning how to predict preferences of regular clients to help build trust and familiarity with the brand, while also providing consumers with a consistent experience. We expect to see more omni-channel initiatives in the hospitality space before the end of 2016.
When considering whether or not to take advantage of these trends for your business, it’s important to evaluate how it will affect your customers’ experience. While some upgrades, such as improving security are necessary, consider how changes to your payments process will make it easier or more difficult for your customers to pay by conducting ‘eyes of the customer’ experiments.