Restaurants and the mobile revolution

Oct. 31, 2014 | by Will Hernandez
Restaurants and the mobile revolution

Taco Bell recently revamped its mobile app to add ordering and payment.

Consumers demonstrate to merchants time and time again that they are more than willing to use their smartphones to pay for goods and services, especially when it comes to restaurants.

Mobile ordering and payment is one of many technology innovations that consumers take advantage of these days. In the U.S., some 69 percent of consumers who ordered food online did so with a mobile device. And while this stat came from an Interactive Advertising Bureau and Viggle survey published in early 2013, nothing in the industry suggests that the trend is on a downturn as we approach a new year.

With these kinds of stats in hand, restaurants now must figure out how mobile technology fits into the overall customer experience when consumers interact with their favorite brands. This was just one of many questions a five-person panel tackled during a discussion about mobile payments hosted by the National Restaurant Association in Atlanta on Oct. 29. Mobile Payments Today Editor Will Hernandez moderated the panel.

"There are always two sides to it," Sarah McCrary, CEO for Boston-based mobile point-of-sale provider Leaf, said in response to a question about consumer mobile payments adoption. "Are the consumers willing to walk in to be part of an experience that includes mobile payments? I think the answer is yes.

"Now the question is, how do owners and operators really come up with a great experience that is consistent with the overall guest experience they are trying to create That has operational implications, back office implications and service implications because you have so many options to do it."

Indeed, there are many options for restaurants to consider these days even though not a single product dominates the market. In regard to mobile payments, the problem remains much the same today as it was a few years ago: They still don't solve a particular problem.

"There are opportunities for us to improve that," Brad Brodigan, vice president of retail at PayPal, said during the panel discussion. "There is a real opportunity for mobile payments to help consumers save time and save money.

"But until we demonstrate that clear value, we don't expect to see habitual use of mobile payments day in and day out — but we do think we can solve those problems and I think we're just getting started."

LevelUp believes that it's one of the companies laying the groundwork for more mobile adoption in the restaurant environment. The Boston-based company views itself less as a mobile payments provider than as a marketing company that uses transaction data from QR code-based mobile payments to improve merchants' advertising with loyalty campaigns.

Michael Hagan, the company's chief sales officer, said there is no shortage of great ideas when it comes to mobile payments.

"But now it's about translating it into action from the consumer and giving them something that they want," he said.

LevelUp, along with PayPal and others, now uses beacon technology to drive consumers to action.

Earlier this year, LevelUp introduced iBeacon support to its merchant partners. Merchants can use Bluetooth Low Energy technology to ping customers' smartphones within range of a beacon device with announcements, notifications about coupons, and other loyalty offers.

LevelUp experienced immediate success with BLE. The company launched its iBeacon program in early May and claims that within 30 days, participating businesses saw a 22-percent increase in customers' spend — through either the LevelUp app or other apps built on the company's platform.

Lapsed LevelUp users, those who have not used the app to pay at a merchant for more than 30 days, increased their rate of purchases 63 percent following iBeacon integration.

"It gets back to the guest experience the moment you're in range of a beacon, to the moment you leave and how you communicate," Hagan said. "With the payment in the middle of that sandwich, you get to know if the message delivered from the beacon was successful whether it was about a reward reminder or a message to try a new sandwich.

"What's amazing ... about mobile payments is that the data that swirls around the transaction gives you incredible insight that you'd never have, and [the ability] to tie marketing into the transaction."

The panelists addressed other issues facing restaurants today, including EMV migration and changes to legacy point-of-sale systems.

Phil Kumnick, senior vice president of global acquirer processing at Visa, commented on the EMV liability shift: "It's a choice. You might look at your fraud environment today and you might not deploy EMV terminals. You might launch pay-at-the-table in a different environment with contactless or just a regular swipe on a secure payments platform.

Sarah Owen, the executive director of marketing solutions for Heartland Payment Systems, commented on what restaurants face with a changing point-of-sale environment.

"I think for too long our clients have been held hostage by the point-of-sale systems," she said. "One of the most critical things is, how flexible or how open is the point-of-sale system you choose to purchase or choose to partner with?

"I think there will be certain solutions that mobile point-of-sale companies will provide, but with the way technology is changing the consumer experience, you're probably going to want to partner with multiple technology companies ... to provide pay-at-the-table and mobile ordering, and to have a system that can accept different payment forms to create the best customer experience."

Photo courtesy of Mike Mozart.


Topics: Card Brands, Contactless / NFC, In-App Payments, Loyalty Programs, Mobile Marketing, POS, Restaurants, Security, Trends / Statistics

Companies: LevelUp, PayPal, Visa



Will Hernandez
Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago. View Will Hernandez's profile on LinkedIn

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