Riding the cutting edge of payments

By Lisa Terry • Contributing Editor | November 01, 2006

In a few short years, payment options such as debit cards have gone from foreign to familiar to U.S. consumers. That's why it's important for hospitality operators to keep up with--and even try to get a jump on -- innovative payment technologies as they emerge. Providing consumers with convenience, security and plenty of options can be key to drawing their loyalty and patronage. Agreeing to test these newer technologies gives some operators a jump on the next big thing.

At the table
The stay-ahead-of-the-curve approach to running a business rings true for Adam Greenberg, owner and president of Potomac Pizza, a four-unit pizza chain based in Maryland. "We're big into technology, and like to update every few years," Greenberg says.

As such, Greenberg responded enthusiastically when VeriFone (verifone.com/ hospitality) approached Potomac Pizza to test its On the Spot mobile payment solution, used to close a transaction at tableside. The test is underway in one store. The project included two days of implementation, including installing a Wi-Fi network, training staff, and ensuring smooth integration with the point-of-service (POS) system.

Greenberg had eyed full mobile hand-held solutions for a few years, which enable ordering as well as payment. "But in our environment it doesn't make sense," he says.

The VeriFone solution is completely integrated with the chain's Micros (micros.com) POS solution. At the end of the meal, the server presents the check to the table. If payment is via credit or debit card, the server pulls up the customer check on the device, explains the process and hands the terminal to the customer. The customer verifies the amount, swipes the card, and has the option to fill in a new amount. Then he enters "okay" and the check is closed following approval.

"The card never leaves their hands," says Greenberg. "That's the biggest part of the whole concept. We're the last industry where you give someone a credit card and never see what happens to it." The system also enabled the chain to offer debit payments for table service for the first time.

About 95 percent of customers have been receptive to the idea in the test so far, Greenberg reports; customers who have traveled outside the U.S. are often already familiar with the approach.

But what's new now will quickly become expected, Greenberg says. Potomac Pizza's customers see the device, and think about the potential for skimming in other restaurants where the card swiped out of its owner's sight, he notes. "Right now it's too new to increase our business, but over time people will start requesting this. It's definitely the future."

The future is something Greenberg is keenly eyeing -- next he wants a similar device to do comparable transactions for Potomac Pizza's delivery service, via a cellular network.

Completely contactless
Another payment approach touted to have a bright future is contactless. New Orleans-based Smoothie King is testing whether its time has arrived with tech-savvy consumers in Denver and Aspen, Colo., in five franchise locations.

"It's an area that embraces technology, and we thought early adopters would embrace the convenience component," says Kenny Tuohy, national marketing manager for Smoothie King, which operates 430 franchised stores in the U.S. and more in South Korea.

The solution includes First Data's Gift Card product (firstdata.com) and RFID-enabled VeriFone Omni 3750 POS terminals.

The chain already operates a reloadable stored-value card program, King Card, which functions both as a loyalty and gift card. This solution adds a contactless component: holders simply wave the EZ King key fob in front of the terminal, and the transaction is debited from the card.

The company's King Card has already positively impacted loyalty and sales. Smoothie King hopes the key fob and easy contactless use will make the brand even more visible than a wallet card, and encourage more visits to the chain. The demographic data collected at sign-up also provides more insight into its customer base and their spending habits.

So far, all five test locations -- three of them fairly new stores -- have seen an increase in the number of people signing up for the King Card club. It's yet unclear if that's a result of the contactless option, increased promotion of the club in general, or both.

"Yes, customers are visiting more frequently and spending more money, but would that work equally as well with a magnetic stripe card? I don't know the answer to that yet," says Tuohy.

Another open question is whether franchise operators will deem worthwhile the investment in the required new equipment. Fortunately, the same equipment would be compatible with other contactless payment systems, such as those offered by the major card associations.

But settling those questions is all a part of the fun for Smoothie King and others wading into new-payment waters. "We believe this lends itself to managing a loyalty program better than others," says Tuohy. "We're constantly looking for ways to enhance our relationships with guests."

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