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Selling Portable Payment in Restaurants

By Michael W. English

There is great opportunity available to you to sell restaurants a solution that increases establishment profitability while reducing the opportunity for fraud and decreasing their cost of payment. Customer-convenient payment has arrived, and it's adding excitement to a market segment with which you are familiar.

Eliminating Credit Card Skimming

A major concern of restaurant owners and managers and restaurant patrons is credit card skimming. Skimming can occur anytime a credit card holder loses sight of his or her credit card, and employees most often perpetrate it. Unscrupulous wait staff or attendants use a small magnetic stripe reader to capture the encoded information from a consumer's credit or check card.

The magnetic stripe reader, used to copy this information, is often small enough for employees to hide it in their apron or pocket. Crooks then re-encode the captured card information and use it for making fraudulent purchases.

Many daily newspapers and Internet sites have already reported incidents of card skimming. No restaurant owners or managers want to read about their establishments in the local paper in reference to skimming.

Identity Theft

The number one issue on the minds of many consumers today is identity theft. The Federal Trade Commission (FTC) released a report in September 2003 stating that 2.3 million Americans discovered that their personal information had been misused in the past year.

Identity theft is the top fraud complaint reported by consumers, accounting for 43% of the complaints logged by the FTC. The number of reported fraud complaints jumped from 220,000 in 2001 to 380,000 in 2002, and the dollar loss consumers attributed to the reported fraud grew from $160 million in 2001 to $343 million in 2002.

Solving the Issues of Skimming and Identity Theft

The solution to skimming and identity theft in restaurants is simple: Implement an electronic payment solution that provides customer-convenient payment, enabling patrons to always keep sight of their card. Portable wireless terminals allow the wait staff to complete the transaction in front of the customer, including card swiping, account authorization and receipt printing.

Depending on the establishment's procedures, the wait staff can swipe the card for the consumer or the consumer can complete his or her own payment transaction, including automated tip entry. When a check card is tendered, a customer can enter a PIN, which converts the transaction from signature-based to online debit.

This type of POS solution solves the issue of credit card skimming and identity theft for both restaurant owners and patrons. By educating merchants on how to solve these issues, portable wireless terminals become a compelling solution to protect the restaurant's patrons and its reputation.

Reducing the Cost of Payment

Online debit is the fastest growing type of consumer payment in the United States. Consumers of all ages and economic backgrounds appreciate online debit for the security and ease of use it offers. Merchants appreciate online debit because it reduces their cost of payment.

The vast majority of cards issued today are check cards, which consumers use for both signature-based and PIN-based purchases. Over the last decade, the number of check cards issued has grown from 17 million in 1993 to 183 million in 2003. Today, more than half the people with checking accounts in the United States have a check card.

Consumers who previously paid by check or cash now use a check card as a more convenient and budget-conscious alternative. These consumers use their check cards with PIN entry for ATM withdrawals, in supermarkets and in the majority of major multi-lane retail stores.

The Ingenico i7770, with its Visa-PED approved integrated PIN pad, is an example of the type of POS terminal that can be brought to the table, giving patrons the options of entering their PIN to complete the transaction as online debit or having the transaction processed as a signature-based credit card sale.

Through parameter and Bank Identification Number (BIN) management, today's portable wireless payment terminals can prompt consumers for their PIN when a check card is tendered, increasing the likelihood of conversion to an online debit transaction. Educating restaurant owners and patrons on the benefits and security of debit will provide new sales opportunities and increased merchant loyalty.

Increasing Restaurant Profitability

One of the keys to selling portable payment terminals to restaurants is to prove to wait staff and restaurant management that portable wireless terminals will save time and put more money in their pockets. These terminals can reduce the time it takes for the wait staff to present a bill, collect the card, authorize the transaction and present the receipt for a patron to sign, usually by 33 - 40%. This improved efficiency provides the following benefits:

  • Moves diners through the restaurant more quickly; turns tables faster and increases restaurant revenue
  • Provides more "face time" with the customer, presenting the opportunity for add-on sales that increase both the meal ticket and tip
  • Improves customer satisfaction through faster transaction finalization and reduced opportunity for identity theft
  • Improves the wait staffs' ability to check patron identification, reducing the opportunity for card fraud

Not only does this benefit the wait staff and restaurant management, it also benefits the consumer. Nothing can spoil a positive dining experience more than a delay in finalizing the check once the patron is ready to leave.

The restaurant's wait staff can benefit from a portable payment terminal's ability to "suggest" a tip percentage. When patrons add a tip to their bill using this type of terminal, the tip options are exactly 15%, 18% or 20%; this is often an increase in tip percentage for the waiter or waitress.

Restaurant Benefits Summary

In summary, short-range wireless and portable terminals offer significant value to the restaurant and the restaurant's patrons. There are an estimated 243,000 full service restaurants with 315,831 points of payment in the United States. Additionally, there are 62,000 hotel, motel and lodging establishments with in-house full service restaurants that have 80,200 points of payment. These segments offer significant opportunity for customer-convenient payment and provide new earning potential for ISOs, MLSs and acquirers.

Michael W. English is Ingenico's Director of Marketing and Communications. E-mail him at .

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