A New Meaning to “Eat and Run”? Restaurants and Mobile Payments

by Davis Wright Tremaine LLP
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Many mobile payment systems tailored for restaurants and other food vendors were introduced in 2011. Restaurant-industry insiders say 2012 will be the year of widespread adoption – and possibly a shakeout. A brief overview of the main contenders and considerations follows:

  • The Rail™: This system was introduced last month by Viableware, which describes it as an innovative pay-at-the-table system that maintains the traditional bill folder look that diners are used to seeing. When the “bill folder” is opened, a digital touchscreen summarizes the bill and gives the consumer various payment options, including “self-swiping” a mag-stripe credit card, or using an NFC-enabled device, at the table. This system has obvious security advantages for the patron, as well as giving the restaurateur a new platform for customized communication with the patron, including advertising, surveys, etc. On the other hand, the system, while well-suited for family dining or fine dining, may not work well with other formats, such as food trucks, that generally do not involve payment at a table using a bill folder.
  • Card Case: In this system, introduced by Square Inc., a patron arrives at an establishment and provides her name to the sales associate at the POS. The patron’s smartphone signals its presence to the POS. The sales associate locates the customer’s name and photo on a screen at the POS. Card Case then automatically charges the purchase to a credit card linked to the patron’s smartphone. While applicable to a broader range of establishments than the Rail™, Card Case would require restaurateurs to invest terminal upgrades and would not appear to provide a platform for customized communications.
  • Tabbedout: Introduced by ATX Innovation, Tabbedout allows the patron to open a tab when visiting a participating restaurant or bar. The patron then shares her individual code with her waiter or bartender, and any item she purchases is then automatically added to her “tab”. The patron pay using the credit card linked to the Tabbedout application, eliminating the need to wait for the bill. Tabbedout would appear to have pros and cons similar to those of Card Case.
  • Square: Square Inc.’s basic offering is already well known . It is a mobile card reader, which permits an establishment to use smartphones as mobile POSs. An unscientific survey of finer metropolitan food trucks indicates that this system is already in use at the more informal end of the dining spectrum.  Whether it will find acceptance at the other end of the spectrum remains to be seen.
  • Chain-Specific Apps: Many chain-restaurant websites (e.g., those of Domino’s Pizza, Pizza Hut, Starbucks, etc) offer apps that permit the patron to call up menus, locations and nutritional data, as well as to order and pay on-line. A key advantage of these apps from the perspective of the restaurateurs – and a key disadvantage from the patron’s perspective – is that each only works for a single chain.\

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