Tuesday, 31st October, 2017

Accepting Cards & Other Payments

We no longer live in a time where cash is the only accepted payment method. Consumers now have many options at their disposal from paying via mobile phone or using contactless technology, tools that have been welcomed with open arms by the food-to-go and quick service restaurant industry and for good reason.

All food-to-go and QSR’s start with the order - which is usually quickly followed up by the payment - therefore incorporating a quick payment method can benefit not only the restaurant but also the customer. Efficiency is key in this market as customer’s facing a long queue may decide to visit elsewhere, therefore contactless payments really can be the unsung hero of getting through the lunchtime rush quickly. Barclaycard states ‘touch and go spending will save UK shoppers almost £1bn worth of time by 2021’, which sounds fantastic for the shopper but also great news for the restaurant as it frees up valuable time. 

The UK Cards Association’s statistics from April 2017 show that over 108 million contactless cards have been issued and people are enjoying using them.  A huge £3,913.3m was spent using a contactless card in April 2017 alone (a 147.6% increase from the previous year). The average contactless transaction for April was £9.40 with the maximum single payment currently being limited to £30, however we are seeing some pressure to increase the limit further meaning the largest of food bills could be paid by one quick and simple tap of your card. Despite these statistics roughly 3 million small businesses still do not have a card machine in operation. 

As shown by those statistics contactless payments have grown tremendously over the last 12 months as Barclaycard celebrate their 10th anniversary since launching the payment method. Along with this we are seeing a growing trend for consumers to be able to pre-order and pay for their food before even setting foot in the restaurant.  In fact they do not even have to speak to someone face to face due to the availability of self-order kiosks which once the food has been paid for - with card usually being the only option – allows orders to immediately be sent through to the kitchen.

London based restaurant Vital Ingredient, have set up their very own online ordering platform with the assistance of Preoday.  They saw 1700 orders taken online for the month of July alone which has helped significantly reduce the in-store queue time. The ordering platform also helped to increase purchase per receipt due to customers being able to browse the entire menu and in turn making more considered choices. 

With online and mobile ordering a proven success with consumers, Vital Ingredient has decided to expand the service, a recent update included the integration with the Vital Ingredient wallet.  Paolo Perretti, Managing Director, of Vital Ingredient says; “As most of our customers are London office workers the lunch period is always very busy. Knowing that queues can be a big turn-off for walk-by customers, we planned to reduce queues in-store by offering a pre-order, pre-pay option.”

With all of this in mind we have a deeper look at what payment options are currently available and what we are likely to see in the future.

Contributors

• Peter Moore, Managing Director, LOLLY
• James Frost, Chief Marketing Officer, Worldpay
• Tony Franklin, Sales Director, Orbis Tech
• Tami Hargreaves, Director of Innovation & Partnerships, Barclaycard Mobile Payments
• Tejal Patel, Marketing & Communications Manager, 3R Telecom

What payment options are available to the QSR/Food to go industry?

James Frost, CMO, Worldpay says; “The QSR sector is based on the principle of quality food served fast, so operators also need to consider how to implement a quick and efficient service in their serving area too, to reduce the burden on staff, and allow them to take up other posts around the restaurant.

“To speed up the ordering and payments process, there are a number of different options available to restaurant owners. Contactless payments, particularly mobile payments, are the most popular, increasing by 336% year-on-year,” adds James.

“But apps and self-service payment options are also on the rise. Our research shows that two—thirds of 21-34 year olds would prefer to pay via self-service, instead of a person. By not offering such a service, restaurant operators are potentially missing out on a large and brand-loyal customer base.”

“There are a variety of payment options available to QSR/Food to go industry such as Desktop Terminal or Wifi Terminal at Base, or Yoyo Wallet,” adds Tejal Patel, of 3R Telecom.  “We believe there is something out there for everyone to suit their requirements. Each payment option differs in features and benefit your business in a number of ways,” confirms Tejal. 

The key drivers for payment within QSR and the food to go industry are speed, and removing the pressure on staff and the kitchen during busy periods.  The introduction of contactless has helped with speeding up the transaction time when it comes to customer payments, which ultimately drives improved profitability.
“However, a recent mandate from VISA, Mastercard and American Express means that all contactless transactions will have to be individually authorised, “explains Peter Moore, MD, LOLLY.  “However this is likely to have a detrimental effect - through slowing down the transaction times for contactless,” he warns.

The industry is now seeing the next level of innovation which is all about pre-payment and collect. Starbucks was one of the first to introduce this and there are now numerous apps like Deliveroo, Just Eat, iScanGo and Flypay. Because these types of App require registration, they are also combining these details to drive customer loyalty.

“However, these services come at a price,” cautions Peter. “You will not only pay a monthly cost per sit but some apps also charge by each customer registration. Merchants will also pay more for the payments, as this will be an online payment and therefore considered higher risk by the acquirers.

“Pre-pay and collect are the future and a requirement of the millennials so ignore them at your peril.”   

It is clear that the future of payments is certainly cashless, with the sector already leaning more predominantly towards contactless and mobile payments. Resulting in more businesses within the QSR sector accepting a wider variety of different credit and debit cards, not just the most popular cards in the UK. “On top of this, support for Apple and Android Pay, alongside other mobile payment systems, is becoming increasingly popular,” says Tony Franklin, Orbis Tech. “This is something that Orbis Tech, as software developers, are reacting to more and more.

“Within the QSR industry the clue is in the name: quick service, and this need for speed is driving outlets to support quicker and more efficient types of payment. Leading the way is the rise of the mobile payment app, with app providers able to offer quicker payment processing alongside digital loyalty and reward schemes, simultaneously improving service times and the customer experience,” adds Tony. 

There are many opportunities for the industry, especially as QSR and Food-to-Go outlets want to be known for fast and convenient service.  “Accepting both cash and Chip and PIN transactions is a good place to start – but we believe embracing contactless payments is a vital next step,” says Tami Hargreaves, Director of Innovation and Partnerships at Barclaycard Mobile Payments.  “In fact, with Barclaycard research revealing that nearly six in 10 Brits are now paying this way, it’s an option that today’s busy shoppers expect to see.

“Merchants are also seeing the advantages of accepting ‘touch and go’ payments, which save an average of seven seconds per transaction compared to Chip and PIN, and 15 seconds when compared to cash. One in five businesses report that they are processing up to 50 per cent more transactions by adopting this technology.
“Contactless is not limited to a ‘touch and go’ card. Mobile apps like Barclaycard’s Android Contactless Mobile or Apple Pay also offer the option to complete transactions,” adds Tami.  “Wearable devices, from a wristband to a watch to a fashion accessory, are other ways consumers can pay just one tap.”

What service providers are there in the market and what can you expect by way of support for your business?

Payment providers like Barclaycard offer businesses advice and infrastructure to help meet consumer demands. This includes sharing their cutting-edge technology, from contactless to ‘invisible payments’ – where payment details are stored and shoppers can simply walk away without visiting a till. “They will also provide ways to keep consumer data safe through anti-fraud measures and secure storage,” says Tami. 

“The best providers not only equip you with the latest products; they also offer consultancy and expertise to keep you up-to-date on the most current innovations and changes in consumer expectations so you can get ahead and stay ahead,” advises Tami. 

Within the sphere of contactless payment, the market for mobile apps is certainly prospering, in no small part due to the cross-platform and multi-outlet support they can offer. “As mobile app providers race to produce ‘the killer app’ we are seeing that apps with new, key features are always coming to market to try and streamline the restaurant experience,” says Tony.  “For diners, a key development in mobile apps is the option to order and pay for food using an app, from the table and at their own leisure.

“Not only does this bypass the need to wait for service, but it also puts more control into customers’ hands as they are able to check over their order personally and pay when they are ready,” states Tony.

Of course, for outlets to truly benefit from mobile payments, integration with their EPoS system is vital as Tony elaborates.  “Systems like Orbis Tech’s EPoS Software can offer full integration with a mobile app, allowing operators to capture customer data at the point of payment, and use this to analyse buying habits, tailor rewards and loyalty schemes and track customer satisfaction if desired.

“For app providers, such as Yoyo Wallet and Como Sense, who offer full integration with EPoS systems, this can help to set their app apart and create an advantage for operators who use it.  As part of our installation package, Orbis Tech offer continued support for operators, which can be key as new payment types become available,” concludes Tony. 

Of course service providers vary in the support and service and there are many of them, each providing a different service.

“Choose the service you are looking for and then compare the cost for the service,” says Peter.  “Along with the support fee and the acquiring costs. Don’t make it complicated instead look at solutions such as YoYo and Flypay.

“It should always be about taking payments to the next level and understanding consumer activity, but on an individual basis, so that the operator can effectively target that person,” adds Peter.

What equipment do you need to have to ensure you can process payments effectively?

Processing payments effectively doesn’t need to be complicated or require lots of new gadgets; your payment provider will be building the latest technology into the products and services they deliver to you. “For food retailers, it can be as simple as ensuring your card terminal is contactless-enabled,” says Tami Hargreaves. 
“For those who trade seasonally or on-the-go, perhaps at markets or festivals, mobile point-of-sale devices such as ‘Barclaycard Anywhere’ may be a simple and cost-effective solution. With a little upfront investment and a small fee per transaction, these devices enable food retailers to generate even more revenue by accepting card payments without being tied into a lengthy contract,” says Tami.

Of course the equipment you need will depend on the environment and the app/product you are operating with, as well as the scale of the operation. “It could be as simple as a 2D barcode or an RFID reader or just a simple loyalty,” says Peter. “The main focus should not be around the equipment, but about the processes relating to payments and the security behind it. It also has to be very simple from a customer perspective.

Peter adds, “Today we are beginning to see organisations using equipment that is focused on biometrics and vein reading - taking security to the next level.”
Alongside an EPoS terminal and accompanying card reader, some mobile payment apps may require additional hardware, such as a QR (Quick Response) code reader to scan codes displayed on a mobile screen. Tony advises; “Whilst this is an investment, the advantages can quickly become apparent as the speed at which a QR reader can process a payment is faster than contactless card payments.”

Payment processing company Worldpay have a number of options for restaurants of all sizes, from My Business Mobile (currently being piloted by a number of micro-businesses in London) which turns any Android NFC enabled smartphone into a payment device, to My Business Hub, our integrated payments terminal and EPoS system.

“It’s gone beyond proof-of-concept to a live trial with around 20 previously cash-only merchants in London,” says James Frost. “The technology will be piloted among up to 50 micro-businesses in London in 2017.  My Business Hub provides the ability to reduce the daily admin burden by automating the reconciliation of cash and card payments.

“Accepting all forms of major debit and credit cards, contactless, mobile payments and cash, the detachable tablet also allows operators to see daily total sales, compare sales trends, access up to one year of transaction history, keep on top of cash flow, manage reconciliation quicker and view invoices on a simple and easy to use platform,” adds James. 

What future developments can we expect in regards to accepting payments?

The sector has seen payments progress from cash to card, then onto contactless and now mobile. A potential future for payment lies in the promise of ‘wearable tech’, such as smart watches. “With Android and Apple Pay both available payment options on supported smart watches, there is already an increasing number of people using them to pay for goods,” says Tony Franklin. 

“What we can expect to see is other payment providers, and indeed existing mobile payment app developers, begin to offer support for wearable tech as well, which will lead to more widespread adoption.

“A caveat with the current state of wearable tech is that the majority of devices require the user to also have their mobile on their person to process the request, with the wearable device acting as a conduit,” adds Tony.  “It’s probable that this dependency will die out over time, which will further liberate payment providers when offering a wearable payment option for consumers.”

“Wearables have been cited as a game changer when it comes to payments over the next few years,” agrees Peter. “We’re already seeing a number of entrants into this market. Security remains the key concern, but it will be exciting to see how this market evolves.”

James Frost assesses that the ‘cashless society’ we are quickly heading towards will continue to push the sector forward.  “Our data shows that payments made via mobile and contactless are increasing exponentially, exceeding £370 million in the first six months of 2017.

“As new smartphone models offer a greater range of mobile payment options and additional biometric security measures, as deployed by Samsung with the S8 smartphone and in the iPhone X, we expect to see this monumental growth increase over the next five years.

James adds; “Our data shows that 61% of consumers would be happy to use biometrics to authorise a payment. In the last few weeks, we have seen many headlines focused on the retail sector taking note of this trend, and using finger vein technology to authenticate payments. We believe that all sectors can benefit from this, particularly the quick service restaurant sector.”

At Barclaycard they expect contactless payment to continue growing with ‘touch and go’ set to increase 317% by 2021. “New developments like contactless watches and car keys mean consumers can pay for a meal or a takeaway with even greater ease,” says Tami.

“Another development with high growth potential is ‘pocket checkouts’, which allow a consumer to scan and pay for goods on their phone. Earlier this year, Barclaycard successfully trialled this technology via an app called Grab+Go in our canteens.

“Users download the Grab+Go app, create an account and pre-load their payment details, then use their smartphone camera to scan the barcode on items of their choice. When finished, they click ‘I’m done’ and walk out; payment is taken seamlessly and invisibly in the background and the receipt is stored in the app.

Finally, Barclaycard note the driving force of younger consumers as the reason for the necessity of cutting edge payment methods. “Half of shoppers aged 25-34 would be open to innovations like retina scanning and contactless chips embedded in their body, such as their palms or fingertips,” adds Tami.

She concludes; “This makes them the most ‘forward-thinking’ age group when it comes to payment technology. So, as their purchasing power continues to increase over time, we should expect not only a rise in contactless and invisible payments, but a rise in these ‘next-generation’ technologies as well.” 

Biffa