With payment technology evolving rapidly, restaurant companies contemplating the adoption of new payment methods to remain competitive and relevant are faced with an extensive list of planning considerations.
The pace of change in restaurant payment technology has been picking up speed. It’s only been in the past 15 years or so that quick-service and fast-casual restaurants have migrated to credit card acceptance, and already there’s been a major development — the introduction of chip cards — requiring investment in new point-of-sale (POS) systems and customer "training."
THINK "OMNI CHANNEL"
Today, even as they adapt to chip cards, restaurant companies must make decisions about a host of new mobile payment technologies — such as mobile wallet options like Apple Pay® and Samsung Pay®, and others impacting payment at the counter, in the drive-thru, curbside and at the table. It's all part of the movement to universal commerce, also known as "omni channel," in which companies look to offer customers the convenience of an array of payment options.
What's more, there's even a new approach to payment processing that restaurateurs need to consider: "Above store" processing, where transactions are stored "in the cloud," eliminates data storage on local POS systems and aims to improve disaster recovery capability.
FIND A FLEXIBLE PLATFORM
Making sound decisions about new restaurant payment technology requires internal coordination. "A universal commerce or 'omni channel' approach to payments is not about IT, treasury and marketing decisions in their respective silos," says Charles Murphy, senior vice president and senior treasury sales officer at Bank of America Merrill Lynch. "Those units should be coming together to define their strategy."
You want to take into account the goals of all internal stakeholders and invest in an operating platform that will meet your company's needs both today and in the future. The platform should be nimble and scalable, allowing a company to add new payment options, marketing features such as loyalty programs, and compliance and fraud mitigation enhancements, as desired down the line. "This is not a 'turn it on and forget about it' type of service," Murphy says.
SECURITY IS PARAMOUNT
As you wrestle with decisions about new payment technology, security should be a paramount consideration. In recent years, a number of well-known restaurant brands have faced serious negative consequences from data breaches of their restaurants' card payment systems, including bad publicity, loss of customer confidence, and millions of dollars in related costs. With that in mind, companies need to make protecting cardholder data a major priority when adopting mobile and web payment vehicles.
Throughout the cycle of any particular transaction — from the consumer's swipe of a card or tap of a phone to the actual depositing of funds into the restaurant company's account — there are many parties involved. "You need to know who those parties are and understand where your risk is throughout that process," says Murphy. "Furthermore, you want to make sure all of those parties are able to communicate and work with each other."
In addition to such efforts designed to mitigate the risk of data breaches, restaurateurs need to employ fraud mitigation techniques for protection in card-not-present environments. In this regard, some of the fraud mitigation tools you will want to consider for your payment solution are address verification, velocity checking (identifying suspicious transactions based on historical transaction data) and device fingerprinting.
KNOW YOUR CUSTOMERS
Card payment data provides demographic customer information never available before in an all-cash environment. Banks like Bank of America Merrill Lynch are able to compile that data and provide it to clients to give them the powerful marketing advantage that comes with truly knowing their customers.
From a strategic marketing perspective, restaurant operators can use such information for a variety of purposes, including making decisions about future investments in payment technology. For instance, if the data shows a large segment of your diners are baby boomers and older, you might not want to invest in the technology needed to accept mobile wallet payments or offer digital commerce apps, both more attractive to millennials.
GET EXPERT GUIDANCE
No longer is restaurant payment technology just about collecting cash from diners. In addition to security and marketing considerations, choices about payment technology can impact treasury issues such as cash visibility and speed of collection — even how you reimburse your wait staff for tips as electronic payment methods help reduce in-store cash.
With the evolution of payment technology in restaurants happening at such great speed, and so many issues to consider, it's wise to seek expert counsel. Contact your Bank of America Merrill Lynch representative about meeting with our merchant services and treasury management specialists for a comprehensive and forward-looking review of your payment technology needs.
- To stay competitive, many owner/ operators are adopting technology that offers diners more ways to pay
- Omni channel payments can potentially increase revenue, enhance cash flow, save money and deliver critical customer data
- Coordinating internal stakeholders across IT, treasury and marketing is essential for success