Digital Transactions Authoritative, insightful and timely information for payments professionals
By John Stewart
@DTPaymentNews
Most mobile wallets in North America have struggled to win adoption and usage among consumers, and some apps backed by major retailers and mobile networks have already fallen by the wayside. But one factor that could promote mobile payments is likely to come from a surprising source: restaurants.
With signature authentication, eateries today can handle EMV chip card transactions much as they do with mag-stripe cards. But issuers will ultimately begin issuing cards with PIN authentication rather than cards that require only a signature, argues Justin Zeigler, director of product strategy at DataCap Systems Inc., a Chalfont, Pa.-based point-of-sale solutions company. That will force restaurateurs to make a choice: equip all their servers with mobile POS equipment they can take to customers’ tables to pay and enter a tip, or encourage customers to use their own mobile phones to complete payment.
Supplying mPOS gear for every server in a single restaurant, even a relatively small one, could easily cost $15,000 or more per location, Zeigler says. “That’s going to be expensive,” he pointed out Monday at RetailNOW, a trade show for value-added resellers and independent software vendors.
Faced with this cost, restaurant owners and managers will likely opt to promote mobile wallets that don’t require added gear like contactless readers. “They’re going to have to move to consumer mobile solutions,” he added, arguing this could prove to be an opening for applications like Tabbedout, an Austin, Texas-based provider whose mobile wallet allows users to open a tab, place an order, pay for the order, and keep track of rewards.
Once consumers get in the habit of accessing and paying with a mobile app, they’ll likely use the same apps or similar ones to pay at other places where the wallets are accepted, Zeigler said at the conference in Grapevine, Texas. This could prove to be a boost for third-party wallets that rely on contactless equipment in stores for acceptance. And to get consumers to pay with their own wallets, restaurants may well join in discounts and other promotions, Zeigler tells Digital Transactions News.
Nearly all EMV cards issued now rely on signature authentication, allowing restaurants to handle EMV transactions, including tip authorizations, much as they do those on mag-stripe cards. But Zeigler predicts that will change when the time comes for issuers to replace the initial cards. “EMV PIN-preferring cards are likely to come in three years as issuers begin to issue cards as part of the [normal] replacement cycle,” he says.
That will complicate tip-adjust procedures as well as add equipment costs for restaurants, he says, since customers aren’t likely to give their PINs to servers to complete payment of the bill.
