Mobile Payments: The Next Generation

20-August-2018

Rumors of stagnation in mobile payments appear to be exaggerated. While some hotel and restaurant operators have resisted moving into mobile payments — often because they believe mass consumer adoption of technology, such as mobile wallets, is still several years away — many others have begun to move forward. Mobile payments play a pivotal role in removing friction from the payment equation and create a better customer experience, says Lori Breitzke, president of payment consultancy E&S Consulting LLC (www.eandsconsultingllc.com). The end result: vendors are devising a second generation of mobile payment solutions, and operators are considering them more seriously.

By investing in mobile platforms that accept all types of payment, restaurant and hotel operators can “future-proof” themselves against disintermediation and remain on a highly competitive plain, according to vendors like TableSafe (www.tablesafe.com) and SumUp (https://sumup.com). The former’s RAIL mobile payment platform, implemented at such establishments as 71Above (www.71above.com), allows for mobile payments at the table using a credit card, Samsung Pay, Apple Pay, PayPal and other payment vehicles. SumUp has integrated Apple Pay and Google Pay functionality into its SumUp Air mobile POS devices, which also accept credit cards. The vendor encourages operators to look beyond traditional applications of omnichannel devices, such as tip acceptance by hotel personnel.

In-app mobile payments are gaining ground, in large part because of the convenience they offer to customers whether payments are made on-premise or remotely. Some players are deploying native apps and chat apps and/or technology that enable payments to be made via social media. Others make in-app mobile payment possible through platforms like ChowNow (https://get.chownow.com).

Shangri-La Hotels and Resorts (www.shangri-la.com) has added in-app payment functionality to its Shangri-La mobile app through a partnership with Ingenico (www.ingenico.com). The Ingenico Connect solution allows guests to settle their tabs without being redirected to other payment pages, and to avail themselves of single-click payments for recurring use. The solution is fully integrated with the chain’s MICROS (www.oracle.com/industries/hospitality) PMS and central reservation systems.

“The app plays an important role in enhancing experience and creates a seamless online-to-offline journey,” which is the key to success with mobile payments, states Oliver Bonke, president and chief operating officer, Shangri-La International Hotel Management Ltd.

Some operators not only accept mainstream mobile wallet offerings like Apple Pay, Google Pay and Chase Pay, but also payments made via China’s Alipay and WeChat Pay. This is in part to accommodate the burgeoning number of visitors from China. The Alipay and WeChat Pay platforms are used by a collective one billion Chinese consumers and dominate the Chinese mobile payment market.

Under terms of a partnership with First Data (www.firstdata.com), Alipay is being integrated at the POS across four million U.S. merchant locations, among them independent restaurants and regional coffee chains as well as food trucks and large stadiums. The partnership also extends to Alipay transaction acceptance at several Millennium Hotels and Resorts (www.millenniumhotels.com) properties in the United States, including the Millennium Broadway New York Times Square and The Premier Times Square by Millennium in New York City; The Bostonian Boston in Boston; and the Millennium Biltmore Los Angeles in Los Angeles. Howard Wu, president, North America and chief technology officer of Millennium Hotels and Resorts, said in a statement earlier this year that the operator’s aim in accepting Alipay is to create a seamless experience for travelers.

Similarly, guests of Luxe Hotels (www.luxehotels.com) in Los Angeles and Beverly Hills can pay for their stay with either Alipay or WeChat Pay. Adam Sydenham, Luxe Hotels’ regional general manager, says the option to utilize these mobile wallets positions the two properties as “preferred destinations” for the “throngs” of Chinese travelers who visit Los Angeles and Beverly Hills annually. Its deployment appears to be a wise move: Research by the U.S. Travel Association (www.ustravel.org) indicates that visitors from China stay in the U.S. longer than other tourists from abroad and spend the most per visit, averaging $7,200.

In another twist on in-app mobile payments, one technology provider — Buy It Mobility Networks (www.bimnetworks.com) rolled out a white-label platform that allows consumers to pay merchants directly from their checking account. The company claims that in addition to affording consumers increased payment flexibility, the solution lowers operators’ transaction costs by 50% to 95% because transactions are not being executed over Visa or MasterCard rails.

Melding Loyalty With Payments

The new generation of mobile payment options in hospitality also incorporates a loyalty component. Cardlytics (www.cardlytics.com) debuted a solution called Direct that permits restaurant brands to target consumers within their bank channels based on their purchase history. Customers are presented with a clickable ad which automatically sends offers and rewards to a bank card stored within a mobile wallet. Rewards are automatically sent to the payment card for redemption on subsequent visits.

Paytronix Systems (www.paytronix.com) recently launched Apple Pay with Loyalty ID, which integrates its loyalty platform with the Apple Pay mobile wallet. With the solution in place, Apple Pay users who are members of a restaurant’s loyalty program receive notifications of and can redeem rewards and special offers when tapping their phones to pay their check. The solution calculates progress to rewards and real-time redemption and prompts Apple Pay users who currently do not participate in a loyalty program to sign up for it on the spot.

Garbanzo Mediterranean (www.eatgarbanzo.com) is preparing to implement Apple Pay with Loyalty ID in its 27 locations, according to James Park, CEO. Park believes the melding of loyalty and mobile payment technology will allow the chain to satisfy customer demand for a more personalized, seamless experience at the POS.

“Modern brand loyalty goes hand-in-hand with consumer expectations of this type of experience,” he says. “The integration of mobile payment and loyalty” satisfies such expectations “by allowing guests to never fumble around at the POS for separate apps or physical cards,” in turn increasing speed of service and creating a competitive advantage.

Breitzke notes that whether restaurateurs and hoteliers forge a marriage of loyalty and mobile payment technology via a platform like Apple Pay with Loyalty ID or within their own apps, improved ease of use and happier customers will bolster mobile payment adoption rates. The higher the rate of adoption, the more data operators will have to analyze purchasing and other patterns (e.g., frequency of visits) and target the right customers with the right offers at the right time. Integrating mobile payments with loyalty does present drawbacks, however. ScienceSoft (www.scnsoft.com) notes that until operators amass enough data about guest behavior, properly targeting offers to loyalty program participants may be difficult, and consumers may be turned off by irrelevant offers. Gathering guest feedback prior to implementing a combined mobile payment/loyalty solution and refining programs accordingly may be the only work-around here.

Some observers contend that combining loyalty with mobile payments is best handled by eschewing native mobile payment apps in favor of an approach like that of Garbanzo Mediterranean. Their rationale: Most consumers prefer not to have multiple apps on their smartphones and would rather avail themselves of mobile payment and rewards opportunities through a more universal mobile wallet, such as Apple Pay.

Addressing Security Concerns

Breitzke and other observers say operators need to continue efforts to shore up payment security if mobile technology adoption is to truly move forward. Statistics from the Fifth Annual Mobile Payments & Fraud Survey conducted by Kount (www.kount.com), Card NotPresent.com (https://cardnotpresent.com), PayPal subsidiary Braintree (www.braintreepayments.com), and payment consultancy The Fraud Practice (www.thefraudpractice.com) indicate that nearly 40% of merchants have seen increases in mobile channel fraud. Of participants in the survey, 25% said they consider mobile app-based payments to be at greatest risk for fraud.

“However, only 30% of merchants are concerned with finding … solutions that prevent fraud in the mobile channel,” observes Steven Casco, CEO of CardNotPresent.com. “At the same time, almost half of merchants say consumers’ perceiving weak security would be the most damaging aspect of suffering a data breach” — meaning that they should feel more compelled to deliver it.

Operators must account for a heightened tendency among fraudsters to compromise mobile payment data by, as one vendor put it, wedging themselves between the additional payment processing layers that comprise in-app payments and compromising data accordingly. They advocate selecting mobile platforms that are EMV-certified and PCI-compliant, leverage point-to-point encryption (P2PE), and are configured so guests’ payment information never resides on a POS terminal.

Meanwhile, other solutions designed to assess the validity of mobile transactions are making their way into the marketplace. One such solution is Kount Complete, which leverages proprietary technology and advanced machine learning techniques to determine transactions’ authenticity and confirm that they were initiated by a legitimate customer, as well as to vet the validity of payments (i.e., that the financial information being used to complete them has not been stolen or compromised). This is accomplished using a “decisioning engine” that analyzes several hundred relevant data variables and activities, matching them with other appropriate data in real time.

According to FreedomPay (http://corporate.freedompay.com) blockchain technology’s use of cryptography in data storage makes it a viable means of thwarting mobile transaction fraud and shoring up mobile transaction security. Cryptography protects data stored on specific blocks within the chain, so data in any single block cannot be altered unless other blocks are also altered.

A combination of blockchain with artificial intelligence could help secure hotel guests’ identification and payment credentials. Worldpay (www.worldpay.com) explains that the data could be stored in the blockchain, where hackers cannot access, and used during mobile check-in and checkout.

Operators must pay attention to other prerequisites for successful and increased mobile payments penetration. Notably, ensure that the technology truly improves service beyond making payments faster by allowing guests to auto-calculate tips, split checks, or receive an e-receipt.Processes should be in place to address in-app payment glitches, according to Omnivore (https://omnivore.io). Cognizant (www.cognizant.com) recommends operators design different versions of apps for Android and iOS devices to maximize adoption.