Mobile Pay Begins to Make its Mark

Del Campo in Washington, D.C., began testing mobile payments this fall using OpenTable’s platform, which integrates with Apple Pay.
Del Campo in Washington, D.C., began testing mobile payments this fall using OpenTable’s platform, which integrates with Apple Pay. Greg Powers

The smartphone has already reached deep into the restaurant industry. Reservation systems like OpenTable and Yelp’s SeatMe allow customers to reserve tables without ever making a phone call. Diners can locate and review restaurants with apps like Yelp and Urbanspoon. And now the smartphone’s newfound tie to consumers’ wallets through mobile payment has it primed for even more influence in the industry.

Already, fast-casual and quick-service brands were leading the way with mobile pay and specially created apps. But industry observers say full-service restaurants are now gearing up for big plays with mobile payments—acceleration prompted in part by the launch of Apple Pay. In September, Apple announced that its new models, the iPhone 6 and iPhone 6 Plus, would feature contact-free payments thanks to a built-in near field communication antenna, which allows customers to instantly pay without ever touching their wallets.

The change comes at a time when retailers are already considering upgrading credit card terminals as the clock ticks toward October 2015, when merchants will assume liability for fraudulent purchases unless they are compliant with Europay, Mastercard, and Visa (EMV) standards. The EMV transition will require chip-and-pin cards—and card readers—rather than the current standard of magnetic stripe cards.

“There’s a lot of change in the marketplace right now with EMV and Apple Pay,” says Norm Merritt, president and CEO of ShopKeep, a cloud-based point-of-sale (POS) provider used by more than 10,000 small businesses.

Apple changed how consumers listen to music, how they think about computing, and how they use the smartphone, Merritt says. So its entrance into mobile pay shouldn’t be ignored. “I think if anybody has the capacity of getting this adopted, it’s Apple,” Merritt says. “The company has timed its entrance in an interesting way.”

With Apple Pay, customers’ iPhones wirelessly connect with a merchant’s near field communication antenna to transfer money. The process uses three levels of authentication, meaning merchants don’t ever acquire credit card data. Plus, an Apple Pay transaction takes only about 10 seconds, Merritt says, while a traditional credit card transaction can take 20 to 25 seconds.

“You don’t have to print out a receipt,” he adds. “You don’t have to sign anything.”

Scott Holt, vice president of marketing and solutions at mobile POS provider ROAM, says this transition means restaurants should try to be as inclusive as possible, offering multiple payment methods and even multiple mobile pay options.

“If a consumer wants to pay with mobile payment, then why not let them do that? If a consumer wants to pay with credit or cash, let them do it,” Holt says. “It’s all about consumer demand.”


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