New Payment Options

In the last few years, a lot of progress has been made in payment processing. Pay-at-table scanners, radio frequency technology, near-field communication, and short message texting have become buzz words in the industry, but how close are we to adopting these systems in real-world situations and just how secure are they?

When you're talking about peoples' hard-earned money, there is no room for error. In February, the Federal Trade Commission reported that identity theft topped the list of consumer fraud complaints with 258,427 instances reported in 2007, 23 percent of which were from credit card fraud.

Food service providers are hoping that many of the new payment options on the horizon will reduce the length of time a credit card is out of the customer's hands, bolstering security and reducing identity fraud. Turning tables faster is an added bonus.

Pay-at-table
The most proven of the new technologies is pay-at-table processing. Using a handheld device, servers can let the customers swipe their own cards and punch in their PIN numbers without ever giving the card to the wait staff.

"There is a need for guests to feel secure with their credit card," says Bryan Housley, operating partner for Ray's On The River (www.raysrestaurants.com). "We've all heard about the scams where thieves can scan cards or possibly write down the numbers. From the guests' point of view, they feel very secure if the card never leaves the table or their hand."

Speed of service is another selling point of pay-at-table processing. During a lunch crush, wait staff doesn't have to drop a check, wait for the guest to hand over their card, run to the POS terminal, and then turn around and hand it back to the guest. Instead, the entire process can be done in one step at the table.

Ray's uses VeriFone (www.verifone.com) Vx 670 series portable devices, which are seamlessly integrated with its Micros (www.micros.com) POS solution. To use the handheld units, the servers simply enter their identification number, choose the table, have the guest approve the check on the digital screen, and then swipe the card. The customer then receives a printed version of the itemized check on thermal paper that also serves as the receipt.

The units use radio frequency wireless signals (not to be confused with radio frequency identification) to communicate with the POS system. Wireless hubs hidden throughout the restaurant feed the signal between the units and the back office computers.

Return on investment is best gauged by speed of table turns. "As a large restaurant, we have a lounge with live entertainment and guests can go on-wait/off-wait really fast," Housley says. "In the lounge, you can process a payment really fast table-side, and get the guest into the dining table. Ultimately, that puts the guest on less of a wait."

For guests that might still be concerned that the image of their credit card number is left on the handheld, Jim insists that new credit card security only leaves four digits and there is no way to go back after a guest has left and retrieve any other information from the credit card.

Pay-by-wrist
Some new payment processing technologies don't even require a credit card; such is the case with radio frequency identification (RFID). RFID has been used in the retail, government, and pharmaceutical industries for years now, but RFID is only now starting to catch on with the food-service segment. That's partially due to the niche environment that it would be best suited for: resorts and theme parks.

Originally designed to track packages through a supply chain, this system of scanning information via radio signals is now being used as a tender. To run an RFID system, companies must purchase the chips, the software that writes information onto the chips, and a scanner that reads the information.

At Herschend Family Entertainment (www.hfecorp.com) based in Georgia, wristbands embedded with RFID chips are being used to allow guests to carry their money throughout the water park without having to run back to their lockers to get their funds.

Two types of bracelets are available. A silicone one, similar to the Lance Armstrong "Live Strong" band, has a chip for season pass holders to charge up with money (much like a gift card) and take it back and forth with them throughout the season. A one-day, disposable band is used for guests that are only staying a short time.

The money on the bracelets is a valid tender for every POS system in the park. Herschend installed a Feig (www.feig.de) wand-scanning system that a cashier can use to scan the band.

The RFID chip allows food-service providers to add money to the chip, reload money on existing bands, and zero out a band if there are any problems. The staff can also check when the bracelet was last used to approximate where a guest might be.

"You can imagine that at a water park, the last thing you want to do is go back and forth to a locker to get money for food," says Brandon Kenney, vice president of information systems at Herschend. "It's a natural fit for us and the drive for us was to increase our per cap. It's hard to approximate the percent increase in revenue associated with RFID, but when you are removing some of the obstacles in accessing tender, there is an upside."

The biggest downside with RFID in other verticals is cost. A one-time use band with an RFID chip costs about one dollar, with reusable bands running near three dollars. Kenney said that the largest hindrance he saw with RFID was getting all the existing Micros POS systems to work with RFID, but all systems are now up and running and the end result was worth the installation pains.

"There is nothing slower than cash, so by going to the band itself, that definitely helped out line-speed and boosted sales," Kenney says. "The technology has been around for a while now and has proven itself."

Getting near (field)
One technology that still hasn't proven itself but is causing a stir in the restaurant space is near-field communications (NFC) for payment processing. While still considered an emerging technology, NFC would allow guests to pay for their meals via their cellular phones.
 
Using NFC, guests can link to the POS system and wirelessly transmit their payment information and receive a digital receipt in return. Much like Bluetooth, NFC is a short-range communication service and would work similarly to EZ-Pass. The system would be most beneficial in the drive-thru and fast food environment.

At the moment, NCR (www.ncr.com) has been the most vocal about its foray with NFC technology. The POS company purchased a large stake in contactless technology provider ViVOtech (www.vivotech.com) and is using NFC in its new RealPOS payment readers. However, NCR has yet to release information about specific customers in the restaurant space that are testing the technology and how they are using it.

Text it in
The most unproven of all the new payment technologies is payment via short message services (SMS), better known as text messaging. Although more than 18.5 billion text messages are sent every month, the idea of using a text message to pay for food is still up in the air.

Papa Johns Pizza (www.papajohns.com) recently started taking orders texted in from customers, but a spokesperson told Hospitality Technology that there are no plans as of now to use the system for payment processing.

Tech providers, such as Australian-based Eko (www.eko.com.au), have been trying to change that, with applications designed to receive real-time payments from customers' cell phones. The system features a gateway that transfers the text information from a cell phone signal to an Internet signal and then sends the information to the financial institution and the company receiving the payment.

No restaurants could be found using the technology, but SMS payment is still getting a ton of press, which could signal a change in the coming years. As customers demand faster and more secure payment methods, food service providers will be forced to consider stepping up their payment processing systems. Which solution will win out? Only time will tell.