Most every customer these days has a smartphone in his or her pocket. Many also have a tablet in their purse or briefcase as well. With consumers becoming more and more reliant on mobile technology in every aspect of their lives, customer-initiated mobile payments is a natural progression for both hotels and restaurants. While there is not yet widespread use of mobile wallets, experts agree that this is the future of payments.
“When you are talking about money, people don’t change their behavior as quickly as they do for other things,” says Todd Ablowitz, president, Double Diamond Group (www.doublediamondgroup.com), a Denver-based consulting firm focused on the global electronic and mobile payments industry. “Although I predict we continue to see strides made towards mobile payments, I don’t expect to see a widespread open loop of mobile payments to be proliferated in the United States in 2014.”
One of the roadblocks for progression is that there is currently no industry standard — no product or platform is used on a widespread basis. As new technologies continue to hit the market, hotels and restaurants are piloting a variety of different solutions.
An emerging technology landscape
One common form of mobile payment product is the wallet, which allows customers to download one app and use it at a variety of participating businesses to incorporate loyalty and payment. Apps like Google Wallet (www.google.com/wallet) and Isis (www.paywithisis.com) provide the convenience for consumers of only having to download one app and learn one interface, increasing the likelihood of use. On the other hand, solutions like Paydiant (www.paydiant.com) allow operators to create a personalized mobile wallet for their brand that can only be used with their business. While this requires more upfront work from the operator, it can also provide cost savings on transaction fees and allows the operator to have more control over the features.
With the recent focus on data security and breaches, much of the attention has been on securing guest data during the mobile payment process. Additionally, many owners and operators are concerned about the EMV migration, which will require chip cards to prevent customers from handing cards over to an employee. Moving to mobile payment solutions and selecting a product that is EMV-compliant helps eliminate issues down the road. One of the features that Verifone (www.verifone.com) brings to the table is the added security of encrypting the cardholder data so the data is not stored with the business and reduces the risk of theft.
One of the most important advancements for hotels and restaurants is the ability to integrate mobile payment solutions into their POS systems. NCR Mobile Pay (www.ncr.com) allows owners and operators to use the wallet in conjunction with their POS systems which save significant time and hassle for the business. “All transactions run through the system we are used to using,” says Michael Parker, owner of Opal Divine’s (www.opaldivines.com) which uses NCR’s Mobile Pay and POS systems.
Waiting for a standard
Since an industry standard has not emerged, many operators are finding the best interim solution is to use a product that supports a wide range of platforms and carriers to allow the broadest number of customers possible. “What we like about using Isis is the depth of the ecosystem and the joint venture between AT&T, Verizon and T-Mobile,” says Robert Notte, Jamba Juice’s chief technology officer (www.jambajuice.com). “Isis’ relationship with card issuers as well as POS providers really gives our customers a much more integrated experience.”
One of the barriers to adoption has been getting the word out about the availability and benefits of an online wallet. One solution is to show customers value through an enticing offer. Jamba Juice recently used the Isis Wallet for its promotion of giving away a million smoothies. To receive the offer, customers had to use the app to download the coupon for a free product and use Isis Wallet to pay for the smoothie. Over the course of the promotion, Jamba Juice saw a huge increase in the number of customers using the Isis Wallet to pay for other purchases as well.
Another reason that many companies are making the leap towards using a mobile wallet is the ability to integrate with loyalty programs and other offers. Omni Hotels (www.omnihotels.com) currently uses Google Wallet (www.wallet.google.com) for its loyalty program with very positive feedback from guests and is open to extending into the payment portion at some point in the future. Natalie Malaszenko, vice president, marketing & digital strategy at Omni Hotels says that integrated mobile loyalty programs offered by many mobile wallet solutions are especially appealing because hotels are very focused on repeat customers. “When it comes to comfort and understanding, the more people who use Google Wallet, the more it will continue to revolutionize the way that people make payments,” Malaszenko notes. “With our short attention spans these days, the speed that you can pay using Google Wallet and get back to your life is very appealing.”
Before jumping to implement a solution today or waiting to see how the technology plays out, Ablowitz says that owners and operators need to determine what problem they are trying to solve. “If you can’t answer that question, then I recommend waiting until you know what business problem you are trying to solve with customer-initiated mobile payments,” he says.