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Mobile payments: Considering the risks and the benefits for restaurants

4 min read

Restaurant and Foodservice

(Photo: Flickr user Kiril Strax)

Smartphone-toting consumers are always looking for ways to make their lives easier, and it seems like mobile payments could be another thing for restaurants and other businesses to consider when they are looking to draw new customers and keep loyal ones coming back.

But there is an issue outside of convenience that arises with the subject of mobile payments — data security. The retail industry has accounted for more than 36% of data breaches so far in 2014, the Wall Street Journal reported, and restaurants are not immune to such statistics. For example, P.F. Chang‘s was the victim of a highly publicized breach, and for restaurants that are considering adopting mobile payments, data security is a significant concern.

The introduction of Apple Pay and other mobile payment systems has the potential to change the face of mobile payments. So what should restaurants keep in mind when considering mobile payment systems?

According to iSIGN Media CEO Alex Romanov, the privacy concerns of customers are obviously one of the first things to think about. Businesses are required to use PCI standards as a baseline for keeping payments secure, he said, and many restaurant app developers are upgrading their systems to use more secure sign-in procedures, as well.

“With point-of-sale marketing solutions, restaurants are turning to systems that provide rich media offers and generate incredibly valuable data that can help restaurants accurately gauge customer preferences — all without collecting personal information, which addresses privacy concerns,” he said.

Even with security concerns in mind, Romanov said more diners are warming up to the idea of using their phones to pay for their meals. About 40% of customers would use mobile to pay if they could, and nearly half of eateries are looking to meet that demand by considering customer-facing technology, he said.

“My advice for restaurants would be to adopt mobile technologies wherever they can add value to the operation and increase customer satisfaction,” he said.

Even point-of-sale systems in general are not immune to security concerns. A major concern among diners about paying at sit-down restaurants is that most of the time, the card leaves the table with the server, Romanov said. One way to alleviate this concern is with table-side payment options.

One such option is the RAIL system developed by TableSafe. For New Orleans-based restaurant operator Dickie Brennan, the RAIL system has proven to be a successful payments solution for both servers and customers, IT Director Derek Nettles said. The company, which helped TableSafe develop the system, currently uses it at three of its restaurant, with plans to implement it at a fourth by the end of the year.

The RAIL system is a digital pay-at-the-table device that allows diners to split their checks, pay their bills and choose gratuity all on their own, so their cards never leave the table. The system is advantageous from the security sense because customers feel safer being the ones to handle their cards and because it takes that liability off of servers.

TableSafe took security very seriously when developing the RAIL system, Nettles said, and the information is encrypted and isn’t stored anywhere on the device. The system has also taken EMV standards into account, as the October 2015 deadline approaches for merchants to switch over to the chip-based system, according to Nettles. The RAIL system has a new device coming out that will be EMV compliant, which he said is something for restaurants to consider.

“A lot of restaurants are slow to really put a lot of emphasis on this right now,” he said. “That’s a very expensive risk.”

The RAIL system is also beneficial from a service standpoint, according to Nettles.

“It allows the waiter to free up more time on service so they can be less bogged down with the payment process,” he said.

The RAIL system also provides Dickie Brennan with valuable customer data and feedback on the guest experience at the restaurants, Nettles said. At the end of the transaction, diners are asked a series of three questions, one about their experience and two that come from a bank of 25 questions.

The RAIL system also provides Dickie Brennan with the opportunity to educate guests on the other restaurant options they offer, which helps encourage more visits.

That, according to Romanov, is another advantage of customer-facing technology, which is being considered by about half of restaurateurs.

“Some restaurant owners who are looking for new ways to drive sales through mobile are considering point-of-sale marketing solutions that can deliver opt-in offers to customers via mobile devices while protecting their privacy,” he said.

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