Optism™

Mobile payments are revolutionizing the way customers pay for their food or merchandise at restaurants. More and more food establishments now accept a mobile payment that does not involve cash or a credit or debit card. Why? Convenience for both the customer and the proprietor. As these payment programs are fairly inexpensive and do not require much technical knowledge, many businesses, both large and small, have adapted to this relatively new technology. In the restaurant industry, accepting mobile payments has been a boon to small establishments in terms of cost-savings, record-keeping, and ease of use.

Consider the following 4 benefits that come with accepting mobile payments at restaurants.

1. Integrate and Increase Incentive Programs.
One of the biggest benefits of using mobile payments is the ability to integrate customer incentive and loyalty programs into the application. Traditional programs require customers to present key ring tags or punch cards or to supply information, such as a phone number, with every purchase. Mobile payment systems store customer information in the application and then save new information every time the restaurant processes a mobile payment. Customers value mobile technology that links payment to a loyalty or incentive program. As new customers become repeat customers, revenue increases, making the program worthwhile for both parties.

2. Track Customer Trends and Inventory.
If smaller restaurants have difficulty tracking customer trends and inventory, incorporating a mobile payment program erases that issue. This technology is much more than a payment service; because it also tracks data processes to help restaurant management to understand customer preferences and needs. For example, a restaurant may learn that it sells the most chicken wings on Friday nights and can plan for that. When restaurants meet customer demands, they increase sales and customer service, while improving their reputation within their demographic.

3. Increase Customer Checkout Speed.
Customers appreciate fast service, particularly during the payment process. Both staff and customers enjoy a significantly faster payment process with a mobile device instead of a credit card or cash. Since customers are more likely to return to a restaurant that offers a totally enjoyable dining experience – from start to finish – repeat business increases. Additionally, the time saved with mobile payments directly increases profits because more customers are able to dine during a single time period. For example, a restaurant that has a lunch rush on weekdays benefits from offering this type of payment.

4. Save Money on Credit Card Fees.
Accepting credit/debit card payments may not be an option for small restaurants, particularly those in remote locations, due to the high cost of the technology to process a payment and associated fees. For example, farmers’ markets and food truck vendors are unlikely to accept credit card payments. This fact impacts sales revenue, since customers must have cash on hand to patronize these establishments. Restaurants that implement a credit/debit card payment option via mobile payments see an immediate increase in both sales and customer base.
Many mobile payment companies charge lower transaction fees than credit card companies. This means direct savings for a restaurant. As each company has a different structure for its payment program, restaurants need to weigh all options to determine which mobile payment company is most cost-effective.

About the author:

Traditional retail in the U.S. is under attack by eCommerce and mCommerce. By allowing for a broader assortment of inventory, easier access to comparison product information and better purchasing options, these new shopping methods are continuing to grow faster than traditional retail. Although it only accounts for a fraction of annual US retail sales, the numbers are steadily climbing.

In a great presentation, The Future of Retail, on BusinessInsider, Kim Bhasin and  Ashley Lutz analyze the growth of these new shopping methods, how traditional retail is fighting back with their own eCommerce and mcommerce options and how the story is really about giving consumers what they really want which is low prices, a  customized and personalized shopping experience and excellent customer service.

eCommerce
eCommerce will grow by double the rate over onsite retail (10%+ vs. 5%) over the next few years and continues to be dominated by a few top retailers, led by Amazon, Apple and then mostly traditional stores like Wal-Mart, Target and Best Buy.  The online retailers are continuing to innovate introducing same day purchasing and local vending machines.

mCommerce
Mobile devices are further altering the retail landscape. It is projected that by 2017, mobile retail will comprise 9% of the ecommerce landscape, a whopping $31 billion and growing. Comparison shopping sites like Groupon have successfully changed the way we shop online. As mobile continues the rise, so too does the use of the mobile wallet. In a recent blog post, we looked at the Google Wallet experience, and the results were much better than  expected but mobile wallet front-runners face new solutions from traditional retailers.

Traditional Retail
Consumers are fed up with traditional retail with higher prices, lack of inventory, disinterested sales people and are using showrooming as a tool to meet their need for information and better service. Retailers have woken up to this displeasure. Over the past year, retailers have been able to push back on the gains made by eCommerce and mCommerce by making the shopping experience more experiential and introducing own mobile apps. For example, JCPenney has even gone as far as saying they’d like to see the elimination of the cashier operated cash register in the near future, and Urban Outfitters is following suit.

Showrooming
Most experts agree, the “showrooming” phenomenon is real. Interestingly enough, although only 17% of consumers were aware of what showrooming is, 36% agreed they’d done it upon learning the definition. In the case of clothing, showrooming seems very logical. People want to try things on and see how they look and feel before making a decision to buy. The convenience now is that consumers no longer need to return to the store in order to complete the process. The brick and mortar store is an experiential center, it is where we go to interact with the brand, to feel, touch, and see it.

It's Really All About the Consumer
Consumers are looking for tools and options in their shopping experience that allow them to do the following things; save money, save time and provide ideas. For many customers what is most important is face to face customer service. Apple stores are basically a giant customer service desk and their success is causing retailers to change their focus. Traditional stores have customer service in the corner near the entrance but this is the wrong strategy. The customer service desk should be very visible in the middle of the store and omnipresent through mobile apps. The online and offline shopping worlds should not be siloed, but instead be tightly connected.

The shopping experience is changing for the better; more personalized, more efficient and hopefully more enjoyable. More retailers should take the opportunity, especially in the area of mobile, to keep their brand front and center with their customers.

The switch from a physical to a mobile wallet is part liberating, part scary and obviously will take a little bit of time for some people to get used to. As we recounted last year, it is becoming easier to switch to a mobile wallet especially if you live in a tech city like San Francisco, Boston or New York. How have things changed in the last six months? We will look at lifestyle, security and availability and how they impact one man's customer experience with a digital wallet.

Danny Stieben is a college student at the University of North Texas which is located just North of Dallas; he decided to see if he could go walletless for a week using Google Wallet.

Availability

Dallas is a major metropolitan city but it is not one of the U.S. coastal cities where mobile swiping is readily available. Nevertheless, he was able to use Google Wallet at a number of locations including McDonald's and vending machines. Unfortunately, he wasn't able to use Google Wallet at Target or Wal-Mart now nor will he be able to in the future. These bigbox retailers are teaming up with other retailers with a Google Wallet alternative, called Merchant Customer Exchange (MCX). It is yet to be seen what the impact will be of the recent announcements of MasterCard and Visa who are moving towards adding fees on mobile payment transactions.

Security

Security is a concern for many people with mobile payments. Danny said that Google Wallet is very simple yet still secure to use. A user sets a PIN when you first launch Google Wallet that prevents anyone with physical access to your smartphone from buying something with it. Danny feels more comfortable using Google Wallet than credit cards since many banks are now coming out with NFC chips embedded in the cards which could be read anytime and not just during the check-out transaction. Also he is not bothered that Google could potentially use his data for something they need and he would gladly trade that off for the convenience that he gets for the service.

Lifestyle

Danny absolutely loved using Google Wallet. The technology seems to be improving with quick checkout times that can be as fast as or faster than using a credit card.  The transactions usually cleared within a day and the relevant transaction details are passed on to your bank so you see more than just “Google Wallet Purchase” on your statements.

Mobile Wallet usage will continue to grow as more NFC alternative solutions are brought to market and more merchants adopt POS systems that are compatible with mobile devices. Danny is happy with his solution now, but it remains to be seen if competing mobile payment solutions make the experience more or less enjoyable.

We will continue to monitor the mobile payment and mobile wallet news and present our thoughts here. Thanks for listening. Have you ever used a mobile wallet to make purchases? Tell us what you think in the comments.