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National Restaurant Association - Digital wallets: The new ‘interface’ of mobile payments

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Digital wallets: The new ‘interface’ of mobile payments

Seth Priebatch, founder, CEO and “chief ninja” at mobile pay company LevelUp, discusses technological advancements that could change how restaurants and other retail establishments do business. Priebatch, a speaker at the National Restaurant Association’s Restaurant Innovation Summit, Oct. 28 and 29 in Atlanta, shares his projections below on how mobile payment could affect your business.

Get ready for a shift in mobile payments that will rival the cash-to-card shift already in place. While doing nothing in the short term won’t hurt your operation, indifference over the long haul could carry some hazards, given the latest advances that are sure to change the technological landscape. Those changes include Apple Pay, Apple’s new digital wallet, which launched with the new iPhone 6.

Why should operators embrace new mobile payment options? One reason is to stay current and keep younger, millennial customers satisfied. Here are more reasons you should care:

The shift to mobile payment might not happen overnight, but it may seem like it. Look at smart phone adoption over the past five years. Today, 90 percent of customers carry them. Unlike the credit-card shift, which took more than 15 years, the mobile payment transition could take as few as three years.

Apple Pay probably will be a game changer for every business that takes credit cards. The safe bet is to assume that Apple's move will ignite the mobile payments space, just as they've ignited so many others. Fifteen years ago, 90 percent of restaurant transactions were in cash; more than 80 percent at full-service restaurants today are with plastic. The same could happen for mobile payments.

Payment processing rates will go up. Apple Pay, like many other digital wallets, will be tied to credit cards and their omnipresent and costly exchange fees. Apple plans to add to processing rates by tacking on a 0.25 percent fee. Issuing banks are paying that fee for now, but eventually they’ll pass that on to merchants.

If you don’t do anything, your business will be forced to pay that nominal increase. But if you shift to mobile payments, you will have an opportunity to compete with the big credit card companies for customer mindshare. The payment is the focal point of customer interaction, and whoever controls that interaction attracts the customer.

Forward-looking restaurant brands will leap at the chance to own customers’ payment. They’ll be able to gather analytics and data about customers’ transactional behavior. They could save on processing costs; entice consumers with special offers and loyalty campaigns; and control the receipts that show up. And they can use that data to engage guests through customized advertising. American Express, MasterCard and Visa are on to that, which is why they’re keen on mobile wallets.

The bottom line: Act now to open an ever-evolving world of next-generation payment opportunities. Now is the time to devise strategies to embrace the shift to mobile. It’s coming, and sooner than you think.

Get more information on mobile payment at the NRA’s Restaurant Innovation Summit. Register here.

Note: The opinions expressed here are those of Seth Priebatch, not the National Restaurant Association.

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