What Is Mobile Payment? (And Why Your Restaurant Should Care)

By: AJ Beltis

5 Minute Read

Nov 13, 2017

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what is mobile payment

Some of you reading this blog may be thinking to yourself, "Wait a minute - you can pay with your cell phone now?"

The answer is yes, and consumers have slowly but surely flocked to using mobile payment, mobile wallet, and mobile money transfer, so much so that your restaurant cannot ignore it for much longer.

If you're thinking that mobile payments - or paying by phone - is just a fad for millennials trying to keep a phone in their hand longer, think again.

  • 39% of smartphone users admitted that, if the option were available, they would pay with their phone in a restaurant.
  • Mobile payment transactions currently account for about $50 billion in sales annually, and in 2019, are expected to amount to $142 billion.

While some argue that mobile payments are a needless technological advancement, they have surprising benefits for both restaurants and their guests. Sure, it's convenient, but there are also added security benefits and quicker transaction speeds compared to other payment processors. Let's go over the fundamentals of mobile payment for restaurants and why yours shouldn't brush it off so easily.

1) Mobile Payments Are Secure

There are a lot of concerns surrounding the security of mobile transactions in restaurants. Some believe that when payment information is accessible through one's smartphone, they are at a higher risk for theft and fraudulent use. In fact, 47% of cybersecurity experts surveyed by ISACA do not believe mobile payments are secure.

However, this is by no means the end of the discussion when it comes to the security of mobile transaction, because developers have taken steps to enhance the security of this growing sector of transactions.

Mobile payments require many extra steps to complete a transaction. Some payment methods require your fingerprint for the payment to be accepted. Also worth mentioning is that mobile transactions aren't exactly direct. Laura Knapp Chadwick of the National Restaurant Association went on record saying the following:

“Many mobile payment apps encrypt or scramble credit card information before it ever reaches a restaurant’s mobile payment acceptance terminal. This means hackers and criminals pose much less of a security threat. Because the customers’ information is encrypted, it’s one less thing restaurateurs need to worry about protecting on the back end.”

Business Insider reported that through mobile payments, card information is tokenized, "which means that it cannot be obtained and used for fraudulent transactions." This puts the information of your business and your customers in a much more secure place.

2) Mobile Payments Are Becoming Commonplace

Mobile payments were definitely slow to adopt in their early days, but no longer. Restaurants are installing mobile payment equipment at an exponential rate. Let's take a look at some stats from the National Restaurant Association.

  • 43% of all restaurant operators currently offer mobile payment options.
  • 26% of restaurateurs said they would offer these options within a year.
  • 31% of fast casual establishments offer these options.
  • An additional 25% of FSRs will bring in this capability within the next year.

Some pay-by-phone providers - like Apple Pay and Android Pay - require restaurants to adopt special technology for NFC compatibility. Restaurants natonwide have already brought in this technology.

However, Samsung Pay uses Magnetic Secure Transmission (MST) for mobile payments, which makes the process of mobile payment easier for customers and restaurants. By simply touching a Samsung phone to magnetic stripe (magstripe) card readers, an authorized payment will be made. This makes Samsung Pay among the most widely accessible mobile payment options for restaurants and users.

3) Mobile Payments Are Fast & Easy


EMV, or "chip-in" cards, can take up to 12 seconds per transaction. This is extremely tedious and time-consuming for both restaurants and their guests, especially during a busy lunch rush where the line is out the door. Mobile payment is immediate and is processed when the phone registers with the reader.

When comparing mobile payments to cash or credit, American Express reported transaction speeds up to 63% faster than cash transactions (no more waiting around for your guests to find that last penny) and 53% faster than credit processing. This extra bit of speed can keep your line moving and your staff focused on more important tasks.

4) Mobile Payments Create Loyal Repeat Customers

For this example, let's take a look at LevelUp. This mobile payment app lets restaurants offer instant rewards to their guests, who upload their card information to their phones and hold their screen's QR code to the restaurant's reader. Repeat customers earn as they pay whenever they use LevelUp, and restaurants can send discount codes to customers right through the app.

Customer loyalty is now a direct and personalized way of incentivizing your guests. You can now collect customer data and analyze the purchase trends from each individual who walks through your doors. This unlocks key insight that will help you understand the actual people who keep you in business. In turn, you can reward them with something a bit more unique that will keep them coming back again and again.

The Future of Mobile Payments in Restaurants

While some restaurateurs are still struggling to accept the role that mobile payments will have in this industry, customers are relishing in the opportunity to pay quicker, accumulate rewards points, and complete yet another daily task with their smartphones. It's safe to say that mobile payments are indisputably on the rise, and it would be wise for tech-savvy and modern restaurant owners to welcome this trend and get to know its strengths and weaknesses.

Your Turn: Do you take mobile payment in your restaurant? What do you think the future of mobile payments is in this industry? Let us know your thoughts in the comments below!

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