When looking for evidence as to why in-store mobile payments haven't taken off (a hot topic in Karen Webster's column this week), there are a number of factors to consider but only one real guiding principle: certainty.
Consumers need to know that they can use that method of payment where they like to shop and that it will work the same way each and every time.
And that’s regardless of the merchant segment.
This week, the nation’s restaurant community came together to explore the ways in which technology can help create new efficiencies in the store and with customers walking in. The opportunities to do that abound: Consumers are often in a hurry to get in and out, like splitting a check, and like to “check out” when they want to check out. There is a lot of opportunity to remove friction from the payments experience.
But according to newly released research by the NRA (National Restaurant Association — or buns, not guns, as it is fond of saying), a third of restaurant operators say they are behind in tech use.
What The Data Shows
“The restaurant industry is very labor-intensive. Average sales per employee are about a quarter of what they are at grocery stores, for example,” Hudson Riehle, NRA’s senior vice president of research, said during the industry event where the research was unveiled.
Riehle says that technology can clearly help to boost productivity and efficiency in restaurant operations, but it also has to simplify, not complicate, the customer experience.
At the top of the list, restaurants cared about having a website and Wi-Fi for guests. Check. Much lower on the list was precisely the stuff that the payments industry would love more of them to love: kiosk ordering or mobile payment options — whether it be online or in-store.
But not for every establishment.
“Franchisees and chain-operated restaurants have a higher rate of technology adoption, likely because of the resource network they can tap into through their brand. Independent restaurants have to basically start from scratch on things like smartphone apps and POS systems,” Annika Stensson, NRA’s director of research communications, said at the event.
Stensson stressed that “limited-service restaurants” are driven by speed, which is why online ordering, smartphone apps and mobile payment are more the focus for QSRs than white table cloth restaurants.
As for those who haven't implemented technologies like mobile payments, the survey results showed that most didn't plan to adopt new technology anytime soon, and only a few planned on integrating within the year.
Cost is one reason but so is the lack of demand.
“Cost is still perceived as the biggest barrier to implementing more customer-facing technologies, along with lack of existing infrastructure and customer acceptance. Finding cost-efficient solutions and convincing arguments as to their importance are paramount for restaurant operators,” Stensson said.
Mobile Payments Attitude
When talking to the consumer, a bit of a different story surfaces.
NRA found that 20 percent of smartphone-equipped consumers were using a mobile app regularly to pay for their restaurant purchases. And 39 percent said they would use mobile payments in a physical restaurant if available.
Across the quick-service sector, 43 percent of restaurant operators said they do offer mobile payment options; 26 percent said they would within the year. In the fast-casual segment, 31 percent said they offered the option, but 25 percent said they would in the next year.
The biggest reason cited for wanting to add mobile payments?
“Many mobile payment apps encrypt or scramble credit card information before it ever reaches a restaurant’s mobile payment acceptance terminal,” Laura Knapp Chadwick, NRA’s director of commerce and entrepreneurship, said in the report. “This means hackers and criminals pose much less of a security threat. Because the customers’ information is encrypted, it’s one less thing restaurateurs need to worry about protecting on the back end.”
Mobile Pay At The Table
While the restaurateurs may be lagging a bit, there's still plenty of companies trying to innovate the restaurant mobile payments space.
One of those players, who introduced a new solution this week, is Nirvana XP, a Las Vegas-based company that unveiled its all-in-one app for the restaurant payments space. What the app does is enable consumers to use a mobile app to check in, pre-order, make reservations, pre-order for a future reservation, order online and use its self-service payments using their devices via QR codes.
It also gives the customer the option to give the restaurant feedback in real time when checking out.
As for other features, consumers can view the menu and pre-order while they are waiting for the table, and when ready to pay, they can pay using a QR code at the table.
Mobile Ordering Meets Mobile Payment
Mobile payments were a big enough deal at NRA 2016 this year that it had its own special pavilion at the show to highlight new solutions. One dominating theme of the event, of course, was integrating mobile ordering into mobile apps.
That's what came out of Petrosoft, which launched its integrated restaurant POS ordering and delivery solution, equipped with mobile in-app payments. Citing data from the 2016 NRA survey, the company pointed toward why mobile apps are so important today: "The top five reasons for choosing a limited-service restaurant are, not surprisingly, menu-driven, with 23 and 50 percent of consumers accessing menus from their mobile phones at least weekly or monthly, respectively."
And with its new mobile ordering solution, the app that's built for casual and fast-food restaurants also enables consumers to pay in the app, split the order among multiple people and also add in a tip.
Overall, themes of the event — at least, with respect to technology, mobile order and mobile payments — seem to focus on delivering a consistent customer experience, improving mPOS efficiencies, why mobile integration matters and innovating restaurants with mobile upgrades.
And as the research from NRA shows above, restaurant operators may not be up to snuff quite yet, but that doesn't mean consumers are. This was a major point expressed by the featured speaker at the event.
“As technology evolves, so do restaurant customers' expectations,” said Paul Langenbahn, president of NCR’s hospitality division. “Customers expect a cohesive omnichannel experience, and restaurant brands that aren’t anticipating this and embracing technology to enable a frictionless guest experience will significantly fall behind their competition.”
Which, today, is increasingly turning toward mobile.