Mobile Order Ahead

Mobile Order-Ahead Delivered The Goods In 2019

mobile food ordering

“It was the best of times, it was the worst of times.” That famous literary opener could apply to the mobile order-ahead (MOA) space in 2019. Tons of capital was raised and spent on new systems and processes. The year-end report from delivery giant DoorDash told us that burrito bowls, sushi and quesadillas were among America’s most ordered items, depending on one’s location. DoorDash and Grubhub also got deliveries — in the form of municipal lawsuits over tipping, billing and compensation practices common to MOA brands.

As city councils all over the nation get a hankering for MOA tax revenue, the category just keeps growing and evolving. Starbucks has been in the caffeinated lead when it comes to building more pickup-only and drive-thru locations. Others are getting into the act, and quickly too, including New York City-based mobile store Bandit, various pop-ups and so-called “phantom kitchens” without seating from quick-service restaurants (QSRs) including Wendy’s and Chick-Fil-A. Uber Co-Founder Travis Kalanick has even secured $400 million to develop his new CloudKitchens concept, which rents fully equipped cooking spaces to delivery-only restaurants in major metros.

Along with the yummy meals being delivered is a heaping plate of cybertheft. As mobile takes fast food by storm, QSRs find themselves gagging on friendly (and unfriendly) fraud. Chargebacks are the bane of MOA and plans to deal with it feature prominently.

Chargebacks Bite

Digital transformation moves so fast that it often leaves something unlocked as it breezes through. Fraudsters rely on this fact and tirelessly seek to exploit new openings. In the case of mobile order-ahead, chargeback fraud is the one to watch out for, but it’s very hard to spot. QSRs are discovering this as mobile ordering remakes their industry.

In the past QSRs could screen for credit card scams right at the point of sale (POS), typically face-to-face with the fraudster. Mobile order-ahead usage changed all that, exposing eateries to new forms of cybertheft. Chargebacks are the favored method at present, but it’s not always fraud. “Friendly fraud” is when a customer claims their order was wrong and a refund is issued. Not ideal, but not theft. “Unfriendly fraud” is fraudsters ordering with stolen cards, or legit customers making false claims. Either way, the QSR is out both money and merchandise (no one wants that pizza back). Loyalty programs are also rife for abuse by bad actors who can steal and even monetize points.

And don’t forget the fees levied by financial institutions for every chargeback. Banks and issuers monitor business accounts for chargebacks and will hit frequent “offenders” with stiff penalties.

As more players enter this space — like BMW equipping new cars with MOA tech, for instance — it’s a safe bet that cybervillains will keep working overtime to exploit mobile ordering. Comprehensive digital fraud prevention solutions are the answer that QSRs are now seeking in earnest, as they secure this fantastic new moneymaking opportunity.

MOA is a Goer

The appetite for mobile order-ahead is insatiable at the moment, and there’s plenty of money to be made in delivery. It’s yet another industry that has formed up seemingly overnight around new ways to delight paying customers.

As for the chargeback problem that’s beginning to plague QSRs, there are stopgap measures that can be used, such as always asking for Card Verification Value (CVV) codes on the back of charge cards. These are hard to fake, which is great, but it’s not exactly seamless.

Ultimately, serious mobile order-ahead operators will consolidate activities to platforms that perform verifications and use artificial intelligence to bring new efficiencies to this ultra-popular new consumer habit.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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