The advantages of mobile payment for the consumer are obvious – few of us leave home without our smartphone these days, and the ability to use one device for all our needs is an attractive proposition.
“Shopping is poised for a profound transformation and consumers are looking for convenience,” says Rob Harper, director of Mobile Commerce at PayPal UK. “Our consumers have told us that taking their phone out of their pocket is easier than searching for their wallet and then their card in their bag.”
However, there are also significant advantages around mobile payment for operators, not least the ability to reduce costs and drive extra revenue.
“For merchants of all types, a mobile wallet has the potential to boost revenues and reduce operating costs,” says Michelle Grant, senior analyst at Euromonitor.
“This may be accomplished by lowering fraud loss and/or payment processing fees — the latter of which is often cited by merchants as the biggest expense after labour. In addition, mobile wallets may be able to move more consumers through the line more efficiently and thus drive revenues, which is critical in a fast-food environment.”
By enhancing consumer experience, mobile payments can also help a business improve its brand proposition – and operators at the forefront of the mobile movement will have a huge competitive advantage going forward.
“In this sense, payments may just be the period at the end of the sentence. Creating a consumer-centric shopping experience will enable companies to remain competitive in this ever-changing landscape,” says Grant.
“A mobile-enabled environment also gives consumer-facing brands a way to differentiate themselves from their competitors.”
So what are the options for introducing mobile payment to your business?
Perhaps the most talked about mobile payment applications are Google Wallet and Apple Pay, both of which transform the smartphone into a ‘tap and pay’ device which can be used in establishments with an NFC reader.
Google Wallet requires users to purchase a ‘virtual card’, which is essentially a pre-paid debit card that is stored on the mobile device. No card details are stored on the mobile phone and the user must verify payment with a four digit pin before a transaction is processed.
Apple Pay, meanwhile, partners directly with banks. Customers can manually input their card details or take a photo of the front of the card, and the details are encrypted and sent to the company server, where they establish the card issuer. No credit card details are stored on the iphone and Apple uses tokenisation technology to keep data safe. Users must verify payments using the Touch ID function on the iphone.
Currently, neither of these applications are available in the UK. However, Google launched the first step of its Google Wallet service – which enables UK users to send money to each other via an attachment in Gmail – earlier this year and is expected to push out its tap to pay mobile app once it has enough registered users in the UK. Apple is currently in negotiations with banks in the UK, but is expected to launch Apple Pay in the first half of this year.
Mobile payment apps
Once they do launch in the UK, Google Wallet and Apple Pay will offer an easy way for restaurants and pubs with NFC-enabled card readers to introduce mobile payment. However, they do have their limitations.
For operators who want to make the most of data capture, a dedicated mobile payment app that can be integrated with the venue’s existing Epos system can offer a much better solution.
“Apple Pay is very much a mobile wallet - it doesn’t offer any interaction with the consumer or insight on their purchases,” explains Gerry Hooper, sales and operations director for Zapper.
“Our technology allows restaurants to capture consumer information on diner habits, in terms of how frequently they might eat somewhere, the types of meals they might eat and the types of drinks they might drink.”
Zapper, Zapp and PayPal are just a few examples of companies working with the restaurant industry to develop apps that allow for speedy mobile payment as well as data capture and dedicated functionality - such as the ability for diners to split the bill or receive bespoke promotions direct to their mobile.
“We offer a very speedy service for the diner, with some unique features for operators,” says Hooper. “It takes about 60 seconds to split a bill five ways using Zapper and we can send bespoke promotions to the diner via a mailbox on the app. This means restaurants can talk directly to the diner and send them offers which take into account their specific habits.”
Some mobile payment providers are now integrating with mobile ordering apps, enabling restaurants to streamline the entire customer experience. PayPal, for example, is already working with QuikServe and Orderella to incorporate mobile payment into their mobile ordering apps.
“Why queue up in a busy pub to buy a round of drinks when you can order them through your phone and collect them at the bar?” asks Harper. “We are working with the likes of Orderella who enable customers to order their drinks at a variety of pubs through the Orderella app, pay with PayPal and collect at the bar.”
PayPal is also working with some of the larger restaurant chains to integrate mobile payment into their own apps – giving customers an entirely bespoke and frictionless customer experience.
“Customers can now use their mobile to order and pay for a takeaway at wagamamas and avoid waiting for the bill at Prezzo and PizzaExpress, paying instead at the table with their smartphone,” Harper adds. “At Gourmet Burger Kitchen, customers are getting a more personalised experience by using their PayPal profile picture to pay.”
The future is now
Perhaps the biggest barrier to consumer adoption of mobile payment is safety fears, but Hooper is confident the technology will prove to be just as secure – if not more secure - than card payments.
“First of all you have a pin on your phone, but you will also have a pin to access the app. Details are also encrypted so once you scan your credit card and security details in, no-one can view the physical card,” he explains.
“Access is more secure than losing your wallet and someone scamming that. It is a much more secure method of payment.”
And with so many potential benefits for business and consumers, he is confident the technology will revolutionise hospitality in the years ahead.
“Clearly mobile payment is a transformational technology and everything that is transformational, people question,” says Hooper.
“But if you look at the journey from cash to cheque book, cheque book to credit card and then all the noise around contactless last year to where we are now, it is just the logical next step.”
Zapper is a mobile payment and marketing solution that allows customers to scan, pay and go using their smartphones. The intuitive app speeds up payment, allows groups to split the bill and leave a tip, all without the need for a card machine