Over the course of the past few years, the payment landscape in the U.S. has been dramatically shifting in many key ways. Banks are driving the transition to EMV (Europay, MasterCard, Visa), thus shifting the liability off of themselves and on to merchants for transactions on cards that are EMV capable but carried out on non-EMV terminals. At the same time, Google, Samsung, and Apple among others are launching mobile wallet applications for their ecosystem, end users, or mobile platforms. Consumers have also begun the adoption of mobile wallets applications and payments. The use of these payment vehicles could grow exponentially in the coming years. Consumers, at the same time, are evolving to use online payment methods increasingly for their in-app or online experiences.
These three shifts have driven more change in consumer commerce in the last two years than we’ve seen in over two decades. To help restaurant owners better understand and navigate these changes, below is an exploration of the benefits of and some key differentiators between each of the major players in mobile payments—Android Pay, Apple Pay, Samsung Pay, PayPal, and ChasePay.
They key benefits of mobile payment applications for restaurants include:
1. New age security, which includes bank issued tokens for each card saved in mobile wallet applications. This means that your credit card number is secured in case of data breaches. If it was ever stolen, it has limited to no value.
2. Device validation by the user in the form of pin or fingerprint on their device to validate the payment. This ensures that it is indeed the user validating each payment.
3. Ease of use and new, and cool user experiences for in-app purchases as well as retail purchase. EMV transactions just take too long.
4. Saving room in your wallet and keeping credit cards, debit cards, loyalty cards, and gift cards handily available to you in your mobile wallet application.
5. Loyalty Cards can make login and redemption easier for guests.
6. Many future user experiences will evolve over time to make it easier for guest to engage and pay using their mobile applications.
Now to take a look at the major players in the mobile payment space:
ApplePay and AndroidPay function in similar ways. Both transactions take care of the liability shift for the restaurants and both use NFC (Near Field Communication) technology for their mobile payment application to interface with payment terminals. NFC payments have two different modes of operation: CL MSD (contactless Mag Stripe Data) and CL EMV (Contactless EMV). CL MSD is simpler and does not require any additional certifications from EMVCo. or payment processors to take those forms of payment. CL EMV requires both EMVCo and processor certification for each payment terminals. With ApplePay and AndroidPay, merchants get the benefit of liability shift for both types of NFC payments.
SamsungPay uses MST (Mag Stripe Transmission) as well as NFC to interface with payment terminals. Samsung has also installed a small coil built into the phone hardware that lets users pay at most any terminal where you can swipe a credit card. As with other mobile wallets, Samsung Pay can also let you pay with NFC, and it will store loyalty cards and gift cards.
All of the three of these mobile wallet partners have a model that focuses on enhancing guest experience, so to the merchant, this means there is no difference in their interchange fees versus what they are used to paying for their transactions.
Chase Bank is the only bank that has also launched its mobile wallet application—ChasePay. It relies on QR Code technology to interface with payment terminals for acceptance of mobile payment from its app. It has the largest credit card issuing bank in U.S. Chase also has the benefit of owning Chase PaymentTech for payment processing along with its card issuing business.
eWallet Terminal Requirements
At this time, there are no requirements from any agency that mandate the acceptance of any or all eWallets on a device. It is important to note that since most of the eWallets ride the normal NFC/EMV/payment processing rails, as is the case with Apple Pay and Android Pay. If your terminal is CL, MSD, and CL EMV certified, both payment forms will be accepted. It is possible to specifically turn off one mode on purpose, but this action is not advised when working to promote eWallets and build a digital connection with guests using all major forms of payment.
All eWallet providers only capture high-level transaction data for limited archival based on their published public policies. Within each public policy, all eWallet providers state that they do not use the data for any purpose other than to allow customers the convenience of historical tracking for each provisioned credit card. No check level detail data is available to them.
While these three players dominate the mobile payments space today, PayPal and Chase Pay are gaining traction. Digital payment entities are looking to infiltrate the brick and mortar space because transaction fees are lower in-store than online due to the high cost of security necessary in a digital world. There is certainly opportunity for these players to grow in the brick and mortar space, but they must work diligently on making the best possible user experience. Online payment transactions don’t translate well to physical payment in-store today. It’s a clunky experience at best and presents a hurdle PayPal, Chase Pay, and their peers will have to overcome.
As the payment landscape continues to evolve, restaurant operators would be wise to stay updated on the latest from all of the major players in the space. Having your finger on the pulse of customer payment preference, and security measures for payment transactions, can help streamline business processes, save you money and keep your customer data safe.