Mobile payment technology is not yet available for some hotel functions, but it can be useful for coffee shops, pool bars and cash bars at catered events.
GLOBAL REPORT—While mobile payment systems are not yet readily available for many hotel operational functions, such as check-in and check-out, the technology offers a number of applications for hotels—and more are on the way, participants said in a recent webinar titled “Mobile payment technologies—platforms, pitfalls and possibilities,” sponsored by the Technology Committee of the American Hotel & Lodging Association.
Mobile payment has become a standard in many retail businesses, including coffee shops, fast-food restaurants and department stores. According to a report from Gartner quoted during the webinar, mobile payment transactions will top $37 billion in North America in 2013, up 53% from 2012. On a global basis, consumers will use mobile payment systems to buy $235.4 billion in goods and services this year.
“It’s happening now in all kinds of businesses, and it’s something we in the hotel industry need to be aware of,” said Jeffrey Stephen Parker, VP of technology for Stout Street Hospitality. “The hardware is not ready for full hotel operations, particularly in terms of replacing (property management systems), but one day it will get there.”
In a hotel environment, mobile payment systems are ideal for coffee shops, pools and other remote food-and-beverage outlets and for some catering functions.
Parker said his company uses mobile payment to increase revenues and improve inventory controls and security during catered events at its five hotels: four boutique properties branded as Magnolia Hotels and one Holiday Inn.
“Typically, these events have cash bars, and that presents several problems,” Parker said. “People tend to carry less cash these days, theft can be a problem, and inventory controls aren’t good.”
He said by offering mobile credit card payment transacted on iPads, the hotels have been able to double cash-bar sales—in some cases from $500 to $1,000 or more per event—and bartender tips have risen.
The system has full point-of-sale capabilities so managers can load real-time inventories of what the bartenders can sell and after the event receive accurate data on what was sold—“right down to how much Ketel One or a specific craft beer was sold,” Parker said.
“It gives centralized management control of the process we never had before,” he added. “We also have the ability to add or remove items and make creative menus, say for a martini bar.”
Mobile payment basics
Mobile payment systems are available in a variety of hardware and software formats from several vendors. Some systems read credit card data through near-field communications. Others require the customer or the retail employee to swipe the card through a fixed unit or read a barcode or QR code on a customer’s smartphone. And in other formats, the clerk swipes the card through a dongle attached via a USB port or earphone jack to a smartphone or tablet.
Another alternative accepted by some retailers is a so-called wallet application, such as those offered by Apple, PayPal, Google, Square and others. Consumers download the wallet app onto their smartphones and enter credit card data and security information. They can use their wallet app at retail outlets and other vendors associated with the system. Wallet apps also facilitate loyalty programs and coupons, and the app will notify users when they’re in the vicinity of an outlet that accepts the wallet.
According to Parker, mobile payment transactions fees depend on the system and the size of the sale. They can vary from free for transactions valued at less than $10 to 25 cents per transaction or a percentage of the sale, typically between 2.5% and 5%.
The right system for you
The first step in selecting a mobile payment system is defining how it will be used, Parker said. If it will be for a single use (for example, one of Stout’s Dallas hotels hosts an annual community barbecue in a park next to the hotel) or for remote locations, such as cash bars at catered events, it’s important to determine whether you need an interface with the hotel’s PMS or integration into its POS system.
“You also need to plan for security; even though the (vendor) partner you choose will handle a lot of the security issues, some of it falls on you,” Parker said, noting hotel operators need to ensure the security of their Wi-Fi or other mobile networks.
Brian Garavuso, executive VP and chief information officer of Diamond Resorts International, said selection of a network carrier is also important.
“At some of our resorts, we use this technology in remote parts of the properties so we need to make sure we selected carriers with strong signals,” he said.
Whatever device operators choose for mobile payment acceptance—iPod, iPad, Android device or a vendor-specific unit—they need to develop device management protocols. He also recommended against employees using their own devices for the task.
“You need to be able to lock down the devices and track where they are, and you need a password policy,” he said. He also recommended a remote locate function in case devices “walk out the door, even accidently.” Remote wipe is another must, he said, to enable the operator to set the device back to factory settings with none of the property or customer data on it, should the device be lost or stolen.
Selection of a device depends on form factor, Parker said. No matter the use, it should be one with a “ruggedized or rubberized” case or stand that is at least water-resistant.
“Another factor is whether the display needs to itemize the sale or just provide a total,” he said. “If just a total is acceptable, then even something as small as an iPod Touch would work. If full POS functionality is needed, then a larger form factor, such as a tablet, will be necessary.”