It’s no secret there has been a steep decline in cash payments in the last few years. For the generations that have grown up with mobile in hand, never knowing the inconvenience of a world without internet, cash is being used less and less. As restaurant operators eagerly explore ways to reduce costs, make operational efficiencies and, at the same time, deliver an outstanding customer experience, we consider if cashless restaurants are an inevitability worth preparing for.
Convenience and cost-savings
Faster, more reliant, multi-channel web access, stellar smartphone adoption and growing consumer impatience are just some of the factors contributing to the rise of digital banking and mobile payments from a guest perspective. Restaurants stand to make significant gains by going cashless too. From reducing cash-handling costs and mitigating the risk of counterfeit money and burglary to being able to better track consumers and analyze trends for marketing purposes, the move to digital payments offers substantial rewards.
Despite its many benefits, it’s worth mentioning digital payments don’t come without its challenges. Identity theft, privacy concerns and reliability of networks make up the cashless rough waters many industries have been forced to navigate. There’s also the element of social responsibility to the unbanked communities in every society. Despite the emergence of mobile applications and digital solutions enabling those without bank accounts to transfer money and make payments, not being able to pay with cash within restaurants still poses a problem.
Flavors of digital payments in Hospitality
In the US, cash is used for only 31% of transactions. So how are people paying for things? In the restaurant industry, there are several ways guests are paying digitally:
Pin entry device (PED) or mobile payment device
PEDs or other forms of mobile payment devices can be at a counter next to the point of sale (POS), bought to the guest’s table when they’re ready to pay or attached to a self-service kiosk. There are different ways to pay using these devices. A guest could swipe, tap or enter a PIN for their debit or credit card. Or they could pay using Apple Pay or Google Pay on their mobile by simply tapping it on the PED.
There are a number of brands and 3rd party delivery companies such as Deliveroo and Uber Eats that have mobile apps guests can download, order and pay using stored credit card details, Apple or Google Pay.
Guests can use their laptop, mobile or tablet to pay online via a secure web page. This can be done in an order ahead situation where you’re at home and you order and pay online for delivery or pick-up or it can be done in-store, at a table. In this scenario, when the guest has finished their meal and wants to pay, they can enter a url, scan a QR code or tap an NFC tag with their mobile phone to access their check and pay using their credit or debit card, Apple Pay or Google Pay.
Channel of choice
The direction in which restaurants decide to broaden out their payment options often depends on the type of service they provide. Different payment channels lend themselves to different service models. For example, self-service kiosks are best suited to QSRs rather than full-service restaurants and mobile Pay at Table lends itself well to fast casual and other table service type restaurants. Despite there being multiple channels available to pay, one in particular stands out from a consumer experience and operator benefit perspective, and that’s mobile.
Mobile payment is set to continue its rise to become the second most common payment method after debit cards by 2022. And for good reason. Why carry debit cards when you can just tap your phone to pay? Why wait for a member of staff to bring a PED to your table when you can pay the moment you’re ready, using mobile Pay at Table. When many people’s lives are held on their devices, it makes sense that payments are too.
Not all digital payments were created equal
In 2015, there was a shift in fraud liability in the US. If the customer used an EMV card but the restaurant hadn’t upgraded to an EMV terminal, the restaurant would be held liable. Cue the rise in PED and mobile payment devices. Although more secure, faster and cheaper than cash handling, the initial investment in PED hardware as well as maintenance, reliance and availability continue to be challenges operators face today.
If you compare customer wait-time between PED payments and mobile Pay at Table, mobile certainly comes out on top. The comparison between these two types of digital payment is illustrated in this infographic which shows how the time between asking for the check and paying for it can be dramatically reduce from and average 12 minutes to under 2.
This significant decrease in dead time for operators means tables can be turned faster resulting in an increase in revenues. Also, there are cost savings to be made. Staff time cost savings and costs associated with fraudulent chargebacks means mobile Pay at Table offers real value to operators looking to go cashless.
Cashless restaurants – an inevitability?
Whilst all the evidence points to our societies becoming more inclined to pay by mobile over cash or even card, will we see true cashless restaurants become the norm within our societies? At some point it will happen, but perhaps not as soon as you might think. There’s still a need for cash for the elderly population and low-income shoppers who don’t have access to credit lines. In fact, some states in the US, such as Philadelphia passed a bill this year banning stores from going cashless. Until digital payments become less exclusionary or an alternative solution is found for unbanked customers, operators may be forced to offer guests a cash alternative.
When looking at possible cashless trajectories, it’s worth looking at countries such as China and Sweden who have made huge leaps in their move to become cashless. A recent article in the Wall Street Journal commented on the confusion tourists felt when visiting China with the inability to buy anything with cash or even credit cards, vendors instead preferring mobile payments through apps such as WeChat. Some 4,000 Swedish citizens have taken a slightly more dramatic approach by inserting an RFID chip in their arm which allows them to access their homes, offices, gyms, swap contact details and event use their arm as their train or bus ticket by waving it in front of a reader.
The rest of the world might be some way off mega apps like WeChat or might not have the stomach for invasive chipping but there are clues here to a future where physical notes and coins may no longer be accepted in restaurants. Given the substantial benefits that mobile web payments offer and the recent development of alternative solutions to help the unbanked, brands should be careful to not fall behind when it comes to digital adoption.