Ryan Williams
Jeremy Julian

5 Things you need to know about mobile payments

April 9, 2016

Today, we are excited to start our new three-part series about mobile/digital payments! The first article will focus on the basics, the big picture, so to speak, about mobile payments. We will answer questions like what are mobile payments, is it safe, why are people using it and more. The second article in the series will take a deeper dive into the security, operational affects and the branding opportunities that lie within mobile payment capabilities. Our last article will culminate with research about the growth potential and acceptance of mobile payments, as well as a case study about Panera’s 2.0 initiative and push towards mobile payments and technology-based service.

In this three-week series, you will travel down the rabbit hole of mobile payments with the Restaurant Technology Guys as your guide.

Are you ready to get the adventure started?

What are mobile payments?

Mobile payment, also referred to as mobile money and/or mobile wallet, refers to payment services operated under financial regulation and performed from or via a mobile device. Instead of paying with cash, check or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods. The simple definition: a phone or mobile device is connected to your credit/debit card, the information is encrypted and secure, and you can buy almost anything by using your phone. This is a step in eventually phasing out the need for a wallet and a physical credit/debit card on your person.

How does mobile payment work?

There are two main ways mobile wallets work in stores: by using wireless technology called NFC (near-field communication, allows two devices placed within a few centimeters of each other to exchange data. In order for this to work, both devices must be equipped with an NFC chip) or by scanning a QR (Quick Response) or other code.

Mobile-payment services from Apple, Google and Samsung all rely on NFC. After entering banking or credit card information to set up the service, the customer merely taps the phone next to a payment machine at the store and authorizes the purchase, usually with a fingerprint ID. But it works only in stores with newer, NFC equipment. Samsung, however, offers a backup: The phone can mimic the magnetic signals produced by card swipes and work with most existing equipment. Therefore, this capability offers Samsung consumers more versatility and flexibility when it comes to paying via their mobile phones.

Does your business have the capability to accept mobile payments?

Why use mobile pay?

The simple answer: convenience. Just think about it for a second: the only thing you would ever need with you is your phone. You no longer have to worry about carrying or losing a wallet. Sure, taking out cash or pulling a card from your pocket is not going to steal that much of your time. But compare that to sticking out your phone and tapping a monitor, while holding onto a cup of coffee with your second hand, and mobile pay will win the speed and convenience title every time.

To give you an example, New York-based Blue Ribbon Fried Chicken announced on March 9, 2016, that they have integrated Apple Pay into the iPad-based NorthStar Order Entry POS system from Custom Business Solutions at its newest location Las Vegas. By adding Apple Pay, guests are now able to pay in multiple forms and they can do it quickly.

“We knew the guests in our Las Vegas location look for a modern, convenient, and delicious experience the second they enter our restaurant. When considering ways to enhance the guest experience, we knew that technology would play an integral role,” said Bruce Bromberg, one of the chefs and co-owners of Blue Ribbon Restaurants. “We wanted a system that would increase convenience and payment security, while providing a future-conscious answer for our guests.”

Click on the link for the whole story about Blue Ribbon Fried Chicken.

Is it safe?

Actually, it is safer. Viable mobile payment apps meet PCI compliance standards. With Apple, Samsung and Android Pay, you’re assigned an encrypted code that is unique to your personal phone. The encrypted code is entered or transferred into the POS for processing the transaction, so credit card information is not transferred through the merchant’s POS when a transaction is made. So, if a system gets hacked, your main card number is not stolen or compromised. Hackers who obtain the one-time code need physical possession of your phone in order to steal any personal information. Business owners and customers are both given peace of mind, knowing that they are protected and not vulnerable to identity thieves.

Other services have different security methods. Wal-Mart, for example, says no card information is stored on the phone, but the real card number is still stored at what it says is a secure data center. But if that center gets hacked, your real number might get compromised.

Wal-Mart’s app is hooked up to your debit or credit card. The Starbucks app is more like refilling a gift card, and the company doesn’t store your card data.

This is just scratching the surface the security of mobile payments. In next week’s article, we will dive deeper in the security standards and how they rival EMV.

The tipping phenomenon

An unforeseen benefit of mobile payments has been the increase in tipping amounts. Flypay and London-based Cake Technologies have both seen the phenomenon themselves. Stating that businesses have seen people paying between 10 and 15 percent tips on their total bill. This is higher than what people would pay when using a card, which is usually below 10 percent.

A possible reason for this trend is that money does not feel real. With everything online and available through a mobile device, the physical aspect of money is slowly disappearing and because of this, customers are more liberal with their money.

What can you do, as a business to capitalize on this trend?

Be sure to join us next week as we continue our three-part series and take a deeper look in the security, operational affects and branding opportunities of mobile payments!

Need to pass the time between our next post? Then check out Custom Business Solution for all your restaurant technology needs!

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