With the mobile payments market set to explode in the next couple of years, it is definitely worth looking at its current offering and potential impact on the hospitality industry.
Mobile payments – how does it work?
Mobile payments may sound confusing but let us take it back to the basics.
As hospitality professionals you are most likely to encounter the types of mobile payments which are listed below:
– The mobile wallet: the payment takes place at the point of sale. Payments are made on your mobile using wireless technologies such as NFC. It is currently how most mobile payments are made. The Google Wallet application is built around that technology.
– The mobile payment service: in this case you (as merchant) use a mobile device to process card payments, so the transaction also takes place at the point of sale. The very successful application Square signed a huge deal with Starbucks last year and more recently integrated with the Blue Bottle coffee chain.
– All other payments used on platforms that are not mobile-specific. You all know Paypal, Serve is another one that works on the same line. Payments can be made anywhere using mobile devices.
Implications for the hospitality sector
We all need to be aware of the growing trend toward mobile payments featuring cashless and cardless payment platforms, and consider a point of sale strategy that includes transaction incentives to encourage mobile device usage.
There appears to be commonly cited reasons for non-participation including: budget, demand (lack of perceived guest value), support (lack of trained in-house staff), and standards (no established best practices).
However, it is important to remember that there are multiple benefits to embracing these new technologies such as increased consumer spending, acceleration of guest traffic and overall improved customer satisfaction.
Case Study: Geronimo Inns
Our friends at Geronimo Inns are one of the firsts to jump on the bandwagon and have teamed up with Bartab mobile application, paving the way for a bright future in mobile payment usage. Bartab is a particularly innovative application, allowing you to buy drinks and meals for loved ones around you (or even for yourself) with just a couple of taps on your phone. By simply downloading the application onto your mobile device, you can choose what bar you would like to purchase your drink or food from, pay with a registered credit card, and send away. To claim your purchases, simply present the details on your mobile to the designated bar, and enjoy. It’s paperless and straightforward; what more can you ask for? Now you’ll never have to worry about forgetting a significant other’s birthday or leaving your credit card at the bar; all can be easily pacified through Bartab.
Mobile payments will inevitably boost data capture for the participating hospitality entity and will enable the capture of more granular information, including for example: preferred patterns of eating/drinking, times, choices etc. This detailed data allows for a much more intelligent and relevant approaches to subsequent marketing efforts and increases customer satisfaction as they recognise and feel that communication is tailored to their tastes. This should in turn drive revenue for the hospitality business as they leverage off the fact that loyalty has become less brand focussed and more ‘habit focussed’ e.g. If an individual is deemed (based upon tracked behaviours), likely to dine out on a Wednesday and have wine – An offer for complimentary wine with a 2 course meal on a Wednesday is an appropriate one. The benefits in terms of quality feedback are also manifold as problems raised remotely can be dealt with ever more efficiently and again can be tracked to the individual, aiding a better quality customer service.
Interestingly, in a survey carried out of 120 senior hospitality executives, there was only a 34% positive uptake on the idea of moving imminently forward with mobile payment. The more receptive executives were unsurprisingly those inside of the M25, no doubt encouraged by TFL’s commitment to introduce contactless payment on the tube in 2013.
There is an established consensus however within the hospitality sector that ‘Technology is driving everything’ and that technology focussed pursuits are the most likely to add the greatest value to operators’ promotional and marketing activity over and above print, PR and other media. As we see a higher than ever uptake in the leisure and hospitality sector of online operating and marketing solutions in response to an increasingly tech-savvy customer base – it is obvious that business leaders will be soon adopting mobile payments to cater to the shift.
As this new trend becomes more and more widely spread within the industry, you might want to embrace it now!