Use Mobile Technology and the Three P’s to Reduce Fraudulent Payments

| May 19, 2017

Think back to the last time you went out to eat and chances are that a smartphone was involved in some way. Maybe it was for finding a restaurant, ordering a meal, making a reservation, paying the tab or scoring some loyalty points. One thing is for sure, smartphones and mobile devices have earned a seat at the "grown-ups" table, and are front and center in the minds of both guests and businesses.
 
As a result, restaurants and the broader hospitality industry, are now welcoming mobile solutions as an essential asset to their business because they help deliver benefits that people truly desire. Notably, these include increased speed of service, enhanced convenience and cost-saving benefits as a result of reducing time and money spent processing transactions. For example, the popular Washington, D.C.-based fast-casual salad chain Sweetgreen invested significantly on delivering a superior mobile platform that included mobile payments and recently made the announcement that due to the cost-savings potential, more than 60 of its locations will go cashless in 2017.
 
While it’s exciting to get caught up in the technology and embracing the world of mobile apps, we must first talk about the “F word” commonly known as fraud. Unfortunately, at some point most restaurant, bar and club owners will have to deal with fraudulent payments. For some it’s an occasional nuisance and for others it can lead to serious losses. The good news is technology is helping to reduce the likelihood of fraudulent activity, provided you have a solid grasp on your people, processes and payments. This article from Rooam, will discuss how the three Ps, people, processes and payments, will help restaurants prevent fraud and improve business operations.
  
People
Happy employees work harder, so in order to gain the largest ROI, today’s business owners must work to keep employee morale high. One way to accomplish this is by encouraging staff to be diligent and rewarding good behavior. Equally important is coaching staff when there is a failure or when a correction is necessary. By teaching employees to embrace failure as a platform for growth, managers can empower staff and help them to build confidence in their job expectations.
 
As restaurants and bars look to incorporate payment processing mobile solutions, it’s also important to create a culture of security and emphasize the significance of not sharing passwords and authorization swipe cards that allow access to the point of sale and other systems. With the ever-increasing number of data breaches, password security must be a top priority. By creating a culture of shared responsibility for safeguarding passwords and administrative access, owners will have more time for business operations and for building quality customer experiences.
 
Process
As owners update their point of sale systems to include a mobile payment solution, it’s important that staff clearly understand the impact on existing processes and operations. Following old processes will result in the same old problems, such as allowing staff to manually enter credit card information, which is more susceptible to human error and greatly increases the chances of fraud. Ensuring that old practices are discontinued and mobile solutions have a clearly outlined and streamlined process can significantly reduce the probability of internal confusion, mistakes and fraudulent activity.
 
On the back end, some mobile payment solutions offer pre-authorization which allows your establishment to debit funds with a temporary “hold” that lasts up to 48 hours, which helps further reduce fraudulent charges. The biggest advantage of pre-authorizations is to make sure that the person has enough funds on their cards before settling the final authorization. Mobile payment solutions also provide a cost effective Europay, MasterCard and Visa (EMV) alternative to restauranteurs. This process reduces chargebacks that can occur due to the many additional sources of information that a mobile payment solution collects on the user versus the typical signed receipt alone.
 
Payment Technology
According to a statement made by the Payment Card Industry Security Standards Council (PCI SSC) in an industry report by Mobile Payments Today, “When a mobile device is transformed into a POS [point of sale] terminal for a merchant to accept card account data, there is a responsibility to protect that information. Thus, PCI standards begin to apply when a mobile device is used for payment card acceptance.” Security is just one of the many benefits of incorporating a mobile payment solution into your restaurant or bar. Accepting payment for orders through a secure payment application poses less of a security threat because the credit card information is encrypted and protected through a PCI compliant payment processor.
 
By ensuring that all your payment processors, partners and point of sale (POS) systems are PCI compliant, owners can streamline and protect all their reports in one place, (i.e. cloud-based labor and sales reporting, digital receipts, inventory management and more). Forget the adage “If it isn’t broke don’t fix it.” Double-check that your POS and mobile payment technology system is updated and is using the latest version of the operating system. Finally, ensure that you have an anti-virus solution installed and that it is up-to-date and compatible with your system in place.
 
New technology is transforming business operations and guest experiences in profound ways. As owners and managers continue to look to integrate mobile technology into their establishments, following these tips will help reduce fraudulent charges and make adopting to change an easier, more secure and happier experience.  

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