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Cards&Payments | October 2008

Payment Acceptance | POS Trends

Despite the sour econo-my, several NorthAmerican restaurantoperators are makinga fresh run at testing

wireless pay-at-table terminals thatenable on-the-spot acceptance ofdiners’ debit or credit cards.

Besides improved efficiency andthe ability to prevent card skimming

that can occur whenhanding a card to awaiter, pay-at-tabledevices offer restau-rants the allure ofincremental costsavings. By enablingcustomers to enter

their personal identification numbersat the table, restaurants could for thefirst time shift some transactionsfrom signature-debit and credit cardsto PIN-debit transactions, which costless to accept, observers say.

Pay-at-table technology in theU.S. has been languishing without

much growth for the last few years,while it has become well-establishedin parts of Europe and Latin America(see story on page 50). But the possi-bility of capturing more PIN-debittransactions recently has sparkedmore interest from U.S. restaurants.

Debit is the fastest-growing pay-ment method in the U.S., accordingto MasterCard Worldwide and VisaInc., and consumers using debit cardscarrying those card-network brandscan use either a signature or a PIN.Merchants can configure their termi-nals to prompt for a PIN when con-sumers swipe a debit card, says RedGillen, senior analyst with U.S.-basedCelent LLC.

“Merely by providing a PIN pad-equipped terminal, restaurantswould be taking the first step towardcapturing more PIN-debit transac-tions because sit-down restaurantsdo not typically provide that paymentoption,” he says.

The U.S. has approximately 414,000

restaurants, according to a recent re-port by U.S.-based research firm GfKRetail & Technology.

Full-service casual-dining chains,including Claim Jumper, Carrabba’sand others such as Canada-basedCara Operations Ltd.’s Swiss ChaletRestaurants are testing or have fullydeployed VeriFone Holding Inc.’sTablePay and CarsidePay terminals.Ruth’s Chris Steak House, a U.S.-based fine-dining chain, also istesting TablePay.

France-based Groupe Ingenicothis fall also is launching new efforts toget its Pay@Table system off the groundat several North American restaurants.And U.S.-based Hypercom Corp. re-cently announced the availability ofa device designed for pay-at-tableuse in the U.S., where it foresees po-tentially strong growth for the serv-ice in the casual-dining sector withinthe next few years. Hypercom would

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not disclose details of any pilots.“We will eventually see widespread

adoption of pay-at-table technology inNorth America, and although it is pro-gressing very slowly, the benefits forrestaurants are increasing,” says RajivShah, vice president of financial prac-tices in the New York office of consultingfirm A.T. Kearney.

Over the past year, the cost to in-stall terminals has dropped to below$1,000 per terminal, while integrationof the technology into existing soft-ware systems has eased. Moreover,increased publicity about card fraudhas heightened restaurants’ need toshore up card security, Shah says.

“The business case for pay-at-table has improved,” he says.

But adoption still remains slow.“Restaurants that actually try pay-at-the-table love it, but the industry isslower than molasses when it comes

to change,” says Curt Waite, presi-dent of U.S.-based Equity Com-merce LP, an independent salesorganization that has persuaded sev-eral small and independent restau-rant operators to use Ingenico’sPay@Table devices.

The hand-held terminals enableprocessing of diners’ debit or creditcards at their tables, and restaurantsusually integrate them with theirpoint-of-sale software systems.Payment information is sent wireless-

ly to a central communications basewithin the restaurant, which transmitsthe information to the restaurant’stransaction processor. VeriFone’s sys-tem transmits information via an en-crypted Wi-Fi connection, whileIngenico’s system uses an encryptedBluetooth wireless connection.

Both systems are effective in any restaurant size, but Bluetooth-enabled pay-at-table often is easier

We see pay-at-table as an interesting area thatwill eventually catch on, primarily because ofthe convenience factor for consumers.

—Farhan Ahmad, Director of Emerging Markets and New Product Development,

Discover Financial Services

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REVENUE-GENERATING advertising, promotions andentertainment could be the next frontier for

pay-at-table devices, some industry observers andanalysts say.

If such innovations could pay for themselves,restaurants might be more interested in funding a newpayment-terminal infrastructure, says of Farhan Ahmad,director of emerging markets and new productdevelopment for Discover Financial Services.

“Pay-at-table devices could do more than just handlepayments. What if an ad appears while the customerwaits for card authorization? What if a promotion or aloyalty program is involved? These kind of revenuestreams could really spur development of pay-at-tablein the U.S.,” Ahmad says.

Some restaurants are experimenting with such ideas. At U.S.-based uWink Bistro, customers use

touchscreens installed at each table to place their ownfood and beverage orders, play games, and pay withcredit or debit cards. Servers merely deliver orders andhandle cash transactions.

UWink Inc. last month opened its third Californiacasual-dining restaurant and recently began marketingits proprietary touchscreen and pay-at-table technologyto the hospitality industry, a spokesperson says,declining to disclose cost or other details.

U.S.-based TableTop Media this year installed pay-at-table devices equipped with full-motion videoat all 50 tables in a Texas location of the nine-unitCozymel’s Mexican Grill casual-dining chain.Customers can use the seven-inch diametertouchscreen to watch videos describing food andbeverages. A server takes their order, and they canuse the device to pay for their meals with a credit ordebit card.

TableTop Media says it would cost a 50-seatrestaurant $3,000 to $5,000 to install its system, plus aservice charge of $8 to $10 per seat each monththereafter. Restaurants would get a share of revenuefrom advertising and sponsorships, says Shawn Gentry,the company’s president and chief operating officer.

Microsoft Corp. has participated in a sponsorship ofCozymel’s videos, and TableTop Media is in talks withother local and national sponsors, Gentry says.

“So far our test has lifted sales of food and drinkspromoted on the video, and it also provides a richchannel for feedback when we offer surveys about thefood and the experience,” he says. “The system knowsexactly what you ordered and who served it.”

Though TableTop Media is talking with otherrestaurant chains, so far it has no plans to expand thesystem, Gentry says.

ADVERTISING MAY BE UP NEXT FOR TERMINALS USED FOR PAYING AT TABLES


for small restaurants to implement,observers say.

Customers can swipe their cardsthrough the terminal themselves andopt to enter their PINs if selecting PINdebit as their payment option.

Because cards never leave diners’sight, pay-at-table devices can cut therisk of dishonest waiters illegally cap-turing data off of cards’ magneticstripes using hand-held skimmingdevices. Restaurants are a majorsource of card-skimming crimes, ac-cording to research by TransUnionLLC, a U.S.-based credit bureau.

More TurnoverPay-at-table devices offer restau-

rants other benefits, such as eliminat-ing time-consuming steps in thecard-payment process and enablingthem to serve more customers inpeak periods by turning tables morequickly. Most pay-at-table devices areconfigurable so customers can selectfrom a menu of tip options, includingpredetermined percentages, elimi-nating the need for customers toperform their own calculations.

Consumers seem to welcome the

devices. A survey conducted last yearby the U.S.-based National Restau-rant Association found that 53% ofconsumers would like to use pay-at-table devices if they were made avail-able, but only 1% of restaurantscurrently offer them.

Pay-at-table devices also are prov-ing useful for restaurants eager tomeet another trend: payment forvehicle-bound customers’ takeoutmeal orders from chains that do notsupport fast-food offerings.

Technomic Inc., a U.S.-basedrestaurant-consulting firm, recentlyreported that curbside delivery oftakeout food from casual eateries isone of the restaurant industry’sfastest-growing channels. Pay-at-table devices enable faster turnoverof curbside orders because serverscan deliver food to customers and ac-cept payment in one step while cus-tomers idle in dedicated food-pickupparking spots.

VeriFone acknowledges that theeconomic downturn has slowed somerestaurants’ planned tests of the tech-nology, but the company is optimisticabout the potential for pay-at-table

market growth over the next year.“We’re still getting a lot of interest

and activity in testing our latest gen-eration of pay-at-table devices, andwe haven’t seen a dramatic drop in in-terest in TablePay,” says RobbieLopez, VeriFone senior vice presidentof software solutions. “In a toughenvironment like this, restaurants thatcan’t push the top line on sales are

VeriFone’s wireless TablePay deviceuses Wi-Fi connectivity to transmitencrypted payment data to a centralpayment-processing system.

MANY U.S. RESTAURANTS have hesitated toimplement pay-at-table technology. However,

many restaurants in Europe and Latin America madethe leap years ago.

At restaurants in non-U.S. markets where debit andchip-and-PIN transactions are common, pay-at-tableterminals often available so that diners may key in theirpersonal identification numbers.

“Restaurants that had to meet chip-and-PINrequirements had no choice but to develop terminalsthey could bring to customers’ tables,” says Tony Hayes,a partner with U.S.-based consultancy Oliver Wyman. Heasserts that pay-at-table devices are increasingly commonin certain European and Latin American markets.

A variety of terminal makers supply European and LatinAmerican restaurants with pay-at-table devices, includingFrance-based Groupe Ingenico and U.S.-based HypercomCorp. Hypercom says most terminals it sells to restaurantsoutside the U.S. communicate directly with banks and are

not integrated into restaurants’ data systems.In some markets, chip-and-PIN systems have helped

to reduce card-skimming, Hayes says. “The U.S. does notyet have the card-fraud levels seen in other countries,and there is no sign the U.S. will mandate chip-and-PINsystems,” he says, adding that pay-at-table devices maybe useful if U.S. card-fraud increases.

The U.S. custom of adding a tip separately from theprice of a meal was another stumbling block in adoptingpay-at-table systems there, Hayes says. Equipmentmanufacturers have configured U.S. pay-at-tableterminals to simplify the tip-adding process.

“In most other countries, the tip is included in thefinal price, but in the U.S. there is a two-step process.Old habits die hard, and integrating the tip custom intopay-at-table technology has been challenging forrestaurants in the U.S.,” Hayes says. “In most othercountries, the diner’s meal price includes the gratuity, soit simplifies steps in the payment process.”

PAY-AT-TABLE SERVICE IS ENTRENCHED IN EUROPE AND LATIN AMERICA






looking at bottom-line improvements,and those that can convert a lot oftransactions from signature cards toPIN-debit cards could see some real fi-nancial benefits from TablePay.”

Equity Commerce’s Waite says In-genico’s Pay@Table devices cost $650each to purchase and install, and heestimates restaurants could save 0.5%to 1% of the sale by migrating cus-tomers from signature credit anddebit to PIN-debit transactions.“That’s $450 a month for a restaurantthat does $100,000 in revenue permonth, and many larger restaurantsdo around $1 million or more eachmonth in revenues,” Waite says.

“Customers love it,” says aspokesperson at Bergie’s restaurant inSanta Clarita, Calif., which reportspositive results after using a singlePay@Table device in its 40-tablerestaurant for a year. “Diners swipetheir cards, and if it’s a debit card the

device prompts them for a PINnumber. Servers move the devicepretty quickly from table to table, andthe payment process is overall fasterthan with our previous system,” saysa Bergie’s spokesperson. She wouldnot disclose any savings the restau-rant has captured from PIN-debittransactions.

Claim Jumper Restaurants LLC re-cently launched a test of VeriFone’sCarsidePay system, which speeds theprocess of delivering takeout-foodorders, says Ted Stathakis, ClaimJumper vice president of technology.Claim Jumper is conducting the test at

its Laguna Hills, Calif., location, andthis fall the company plans to expandCarsidePay to three other locations.

Later this fall, Claim Jumper plansto test VeriFone’s TablePay technolo-gy at its Costa Mesa, Calif., location. Ifthat test proves successful, the restau-rant likely will expand it to all 45 of itslocations in six western-U.S. states,Illinois and Wisconsin, Stathakis says.The only difference between TablePayand CarsidePay is how they aremarketed, VeriFone says.

Stathakis would not say when thecompany hopes to roll out thetechnology nationally.

“This is a move to improve cardsecurity and convenience for con-sumers, but the linchpin will be in-creasing our PIN-debit transactions,”he says.

Although Stathakis would not in-dicate the transaction-cost savingsClaim Jumper hopes to capture, heclaims customers are demanding PINdebit as a payment option.

“Our guests want to use PIN debit,and if our quick-service restaurantcounterparts can make this option

widely available, we want to offer thesame convenience,” Stathakis says.

Claim Jumper expects to spendabout $1,000 per terminal for pay-at-table devices, and it has not yet deter-mined how many devices will benecessary for each restaurant,Stathakis says.

“We want to find the right balancefor the number of pay-at-table termi-nals we need so we can turn tablesquickly during the lunch hour,”Stathakis says.

VeriFone declined to discussTablePay and CarsidePay experiencesat other restaurant chains, as did theother restaurants involved.

Tabletop AssistanceTo help single-unit restaurants

steer customers to using PIN-debitcards with its Pay@Table tests, Ingeni-co provides tabletop cards explainingthe enhanced card security PIN deb-it offers, says Grant Drummond, anIngenico spokesperson. “In most cas-es, restaurants configure the device toprompt a PIN number if a customerswipes a debit card,” he adds.

U.S.-based Discover FinancialServices also expects to see growth inthe pay-at-table channel in the nextyear or two, says Farhan Ahmad, thecompany’s director of emergingmarkets and new product develop-ment. “We see pay-at-table as an in-teresting area that will eventuallycatch on, primarily because of theconvenience factor for consumers,”he says, offering no estimate of howlong it will be before pay-at-tablebecomes widespread.

Pay-at-table technology seems tooffer certain benefits to the restaurantindustry, especially at casual-diningchains where PIN-debit transactionsmay be relatively popular. But ifadoption takes hold, it likely willcontinue to be at a very slow pace. CP

In a tough environment like this, restaurantsthat can convert a lot of transactions fromsignature cards to PIN-debit cards could seesome real financial benefits from TablePay.

—Robbie Lopez,Senior Vice President of Software Solutions,

VeriFone Holdings Inc.

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The businesscase for pay-at-table hasimproved.

—Rajiv Shah,Vice President of

Financial Practices, A.T. Kearney

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For a longer version of this story, visitwww.paymentssource.com



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