New mobile and contactless payment technology is particularly suitable for small and entrepreneurial businesses, says Peter Ducker, chief executive of the Institute of Hospitality
If you are an Oyster cardholder you will have recently received an email from Transport for London encouraging you to use your contactless-enabled debit card instead of your Oyster card from now on. This is a sure sign that contactless payment is finally going mainstream. We will be using the same card to travel and buy everyday items and our lunch. The need to use a separate Oyster card and top it up inside stations will ultimately become obsolete.
Contactless payment and the technology behind it – Near-field Communication – have been around for a number of years. In the UK, EAT was one of the first high street chains to introduce nationwide contactless payment in 2008.
The weakness of the system, which persists today, has been the lack of security. If you mislay your Oyster card or contactless debit card, anyone can pick it up and use it during the time that elapses before you realise it is missing and cancel it. This is the reason there is a £20 transaction limit and the banks absorb all of the risk on behalf of the both the user and the business.
But now payment with a mobile phone is the safer, next generation of contact-less payment because transactions need to be authorised with a thumbprint or by entering a pin number and consequently are secure and have no limit.
Mobile payment also points to a time when the physical cards themselves – and the security risks they inherently carry – will be unnecessary; debit and credit card information is simply securely stored in the phone; if the phone is lost or stolen it is much easier to replace virtual information than mail out new cards.
So you might think you are already heavily reliant on your phone, yet in the very near future your mobile could become your sole method of paying for goods and services.
Hospitality does not have a very good record when it comes to investing in new technology. In fact, nearly one fifth of hospitality businesses do not even accept card payment. According to a survey of Institute of Hospitality members and their operations by Chip & PIN Solutions, 19% said they were cash-only businesses.
Although everyone has the right to run their business as they see fit, not to accept widespread methods of payment does not make commercial sense; you are simply limiting the ability of your guests to spend money since impulse purchases do not exist. Yes, there is some commission to pay when accepting cards, but this should be more than compensated for by increased turnover.
As mobile and contactless payment become more prevalent, there is a danger that some businesses will get left behind. That would be a mistake. New payment technology is particularly suitable for small and entrepreneurial businesses because it eliminates the need for expensive card terminals or point-of-sale systems.
If you run a market stall, a mobile food van, a small restaurant or a B&B you can simply buy a device from the website of well-known global payment companies and have it posted to you. The device plugs into your phone or tablet and allows you to take card payments.