Tap takeover: Contactless payment is growing in popularity

Smartphones have already eliminated the need to carry a camera, map and mp3 player.

Now, the cherished digital device is moving to render wallets obsolete.

The addition of Near Field Communication (NFC) to mobile devices has allowed hardware and software developers to create mobile wallets, which allow consumers to pay for purchases by tapping their phone to a properly equipped payment terminal.

At Centennial College’s School of Hospitality, Tourism and Culinary Arts, the onsite restaurant and café, The Local, began accepting Apple Pay, one of the leading mobile wallet options. The move to accept mobile wallets aims to ensure the students running the restaurant stay on top of the latest payment technology available.

“We want them to go with the most up-to-date technology; it changes so fast,” said Amanda Tarrant, the college’s general manager of the restaurant and events. “That’s kind of a goal in all of our operations — to use the newest systems and be up to date with those options.”

Aside from having a tap-equipped payment terminal, accepting Apple Pay was relatively easy to adopt.

“It wasn’t something we had to enable. It was already capable within the Moneris machine,” Tarrant said.

The only concern that has arisen from accepting mobile wallet payments is integration with The Local’s point of sale (POS) system. While many POS software systems will recognize if a mobile wallet is using a debit or credit card for payment, the software used at The Local requires staff to ask which method of payment is linked to the device.

“If somebody pays by Visa, we have to put into our system that they paid by Visa,” Tarrant said. “It takes that extra step for our student to ask ‘is that Visa or debit?’ We don’t know the cards they’re tapping.”

Mobile payment was included in Technomic’s 2017 Canadian Trends Forecast as a development that will continue to solidify its position throughout the year. In its top five predictions for this year, the company outlined how operators will pay closer attention to Generation Z, what they call a "maturing cohort of ethnically diverse digital natives” who are used to constant convenience and a fast-changing world.

“I do think it is the future,” said Alex Barrotti, chief executive officer of TouchBistro, the top grossing iPad restaurant POS app in 37 countries. “I might leave the house without my wallet, but I won’t leave the house without my phone.”

Canadian consumers are embracing the speed and convenience of contactless payment, according to Moneris, one of North America’s largest credit and debit processors.

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The Rise of Mobile

In 2013, about 10 per cent of transactions in Canada were contactless. The following year, that number doubled, and grew to 25 per cent in 2015. In 2017, so far, about one in three transactions are made via a tap function.

According to a recent Moneris survey, 55 per cent of Canadians prefer to use a contactless payment method. Within the millennial demographic, that number grows to 67 per cent.

“We consider contactless acceptance to be new normal, rather than a trend, and expect that half of all transactions will be tapped by the end of 2017,” said Rob Cameron, chief product officer at Moneris. “Restaurants and bars will see increasing popularity in the number of customers using contactless payment methods to settle their bills quickly and seamlessly.”

In 2013, Moneris made widespread investments in its infrastructure to support the acceptance of contactless payment. The same year, Moneris partnered with Interac and McDonalds to process the first contactless mobile debit transaction in Canada.

“This was a major turning point for contactless acceptance as consumers could now use either debit or credit cards to tap at the majority of terminals,” Cameron said.

Today, about 85 per cent of Moneris merchants have payment terminals equipped with NFC and are capable of accepting contactless payment from a card or mobile wallet. As well, Moneris offers the ability to add a tip to contactless transactions.

“This will continue to drive adoption in restaurants and bars as those merchants who were not accepting contactless, due to the lack of a tip feature, can now do so easily,” Cameron said.

While contactless transactions are growing, Tarrant noted The Local still sees cash used for about half of its transactions,despite the college’s dominant millennial customer base.

“You don’t have to have money change hands anymore, but I’m actually surprised at how much cash we still see,” she said.

Other ways to mobile pay

Mobile wallets are not the only way to avoid physically exchanging cash. Barrotti categorizes mobile payments into three camps: geo-location, mobile wallets and apps.

“They’re all trying to do away with credit cards,” he said.

Touch Bistro’s first mobile payment partnership was with PayPal, which used geo-location to check into a store and pay. After checking in, the customer’s photo and name would appear in on the TouchBistro system.

“The first time I used it, I went to a local coffee shop, and I had never known the gentleman’s name. He said, ‘Hi Alex, I’m Miles.’ That was really cool. It was a nice way to feel like a small community again,” Barrotti said.

Many restaurant chains are turning to mobile apps to handle ordering and payment.

This spring, Tim Hortons and Burger King plan to launch a new app that will allow customers to pay through their smartphone. Last year, JOEY Restaurants launched the iPhone-only JOEY PAY, which allows their customers to enter a code on their receipt into the app to pay via credit card. Guests are then notified if their payment was successful.

Starbucks was one of the first corporations to introduce an app to order and pay. It debuted in Canada in late 2015.

“It works great for Starbucks, but not everyone has the ability to create a Starbucks-like experience,” Barrotti said.

With the mobile wallets, many tech companies are trying to secure a piece of the emerging payment option by creating their own wallet. Barrotti understands why, since mobile wallets are compatible with a variety of businesses from vending machines to fine dining restaurants.

“I use Apple Pay almost every day. I find it very convenient, it’s very habit forming and it basically works anywhere that accepts an NFC payment,” Barrotti said, adding mobile wallets work with TouchBistro’s POS.

However, mobile wallets like Apple Pay, Android Pay or Samsung Pay are built into the phone.

“Everyone is going after that industry, I doubt sometimes if there is room. When your phone comes with a built in wallet, why would I use another wallet I have to download?” Barrotti said. “There’s going to be a huge shakeout and consolidation as to whatever habit forming one works the best.”

As a POS vendor and developer, Barrotti said TouchBistro is studying the potential market for new mobile payment technology before integrating it into their system.

“We’ve tried other mobile payments in the past, and spent a lot of time and money integrating with them just to see them not flourish in the market,” he said. “We have to look at each solution to see its value.”

The demand from TouchBistro’s customers for mobile wallet use is obvious. Whether or not TouchBistro is compatible with mobile wallets has become “a checkbox” for possible new clients.

“You still have to accept cash, it’s the law, but there’s a lot of restaurants that are popping up that are trying to do way with cash,” Barrotti said. “I totally understand the hassle and the headache.”

Coming soon: ClickDishes

A new app that allows customers to order and pay using their smartphone has launched in Western Canada.

In January, ClickDishes launched the beta version of its app at 15 restaurants in Calgary, including Carls Jr. and select Opa Souvlaki of Greece and Koryo Korean Barbecue locations as well as 10 restaurants in Vancouver.

Vicki Zhou, vice-president of ClickDishes, explained the app allows independent operators compete with chain restaurants.

“Large chains are developing their own order and pay apps. This is convenient for smaller restaurants that want to compete with chains. They don’t have the resources to develop a separate technology product,” said Zhou. “By using this, they can focus on what they’re good at and leverage our technology and support.”

The app also allows its user to order from several different restaurants.

“Instead of having customers download each individual app, we create a platform for our customers to use for different restaurants,” Zhou said. “It’s really redundant to have one app for one restaurant.”

For quick service restaurants, ClickDishes allows customers to avoid lineups by placing their order via the app. The in-app payment allows customers to skip the ordering process altogether.

“Once you arrive at the restaurant, your food is ready and your payment is processed,” Zhou said. “All you need to do is grab the food.”

At full service restaurants, ClickDishes users are able to order, as they’re ready, and split the bill with their table when they finish.

“Our app reduces the amount of time the server has to worry about getting the order right and they can actually spend more time interacting with the customer,” said Vlad Sharpe, chief technology officer for the company.

“You can keep eating and ordering new items; at the end, tap your phone and you’re done.”

There are no fees for restaurants or consumers to use the platform. ClickDishes instead takes a percentage of the order total on their pay-as-you-go model.

All partner restaurants get access to the ClickDishes dashboard, which comes with a free tablet, stand and receipt printer.

As well, the service includes backend analytics and reporting, allowing operators to see what items are popular in real time.

The app, available for Apple and Android, is expected to expand to all major Canadian cities by the end of 2018.