How contactless payment can help pubs

Contactless has gone mainstream. More than £2.5bn was spent using contactless cards in the first half of 2015, which was more than the total contactless spend in 2014*.

In response to its popularity, the upper spend limit per contactless transaction has now been increased from £20 to £30 — a particularly significant rise for the pub industry, considering the average card spend in pubs is £25.97*.

“Contactless is clearly growing everywhere. It’s a very convenient way to pay, and has become an essential part of the mix retailers need to offer,” says Tom Weaver, chief executive of payment app firm Flypay. “The pub industry is in a particularly good position to take advantage of contactless because it’s traditionally a cash-based business”.

According to MasterCard, merchants accepting contactless payments can benefit from faster checkout, increased transaction volumes, higher spend, and reduced cash handling costs. And the global payment technology company says it prepares the way for mobile device payments.

Indeed, contactless payment could help the pub industry move into the digital age, says Dennis Collet, chief executive of mobile payment and ordering app business, Orderella.

“Expectations have changed,” explains Collet. “Consumers, especially the younger generation, want service on their terms — not when the waiter or bartender is ready to notice them. This is a way to attract the millennials back into the pub.”

*UK Cards Association​

5 popular ways to pay​

We take a look at the key features and benefits of some of the leading contactless payment methods on the market — including some of the apps that are changing the way we order and pay for food and drink in a pub

1: Credit or debit card​

What it is:​ Debit or credit card facilitate payment without the need to key in a PIN.
How it works:​ Because the card contains an antenna that securely transmits purchase information to and from the contactless reader, customers simply tap their cards against the terminal.
Benefits for consumer:​ Speed of transaction, ease of use (there’s no need to rummage around the wallet for cash), and security (contactless cards have the same protection as Chip & PIN payments).
Benefits for pub:​ According to the UK Cards Association, retailers can benefit from increased average transaction value (consumers are not constrained by the amount of cash in their wallet); improved staff productivity; reduced cost of cash handling; and risk reduction (payment is assured).
Installation:​ Most likely, you’ll need to replace your existing terminal or add a plug-in contactless reader to your existing payment terminal.
Fee: Card handling fees.  

2: Orderella​

What it is:​ Mobile ordering and payment app.
How it works:​ The app user selects the relevant pub from an on-screen list; orders a drink from the menu; chooses ‘pick up at bar’ or keys in a table number for table service; then chooses whether to pay by PayPal, Apple Pay, or credit or debit card through the app. The order is then sent to the bar.
Benefits for consumer:​ Order and pay when it suits, without the need to find a bartender or waiter; can leave the wallet at home.
Benefits for pub​: Once the app service is installed, Orderella says like-for-like sales go up 5% to 11%, and 90 seconds of man hours are saved per order.
Installation:​ A pub needs an iPad. Orderella sets up a pub on the app in about two hours (remotely), integrating the system with the existing EPoS, if required.
Fee:​ Fixed monthly fee, based on a pub’s takings.

3: Flypay ‘Pay at Bar’​

What it is:​ A payment app that’s ‘reinventing’ the bar tab for the smartphone generation.
How it works:​ Customers order at the bar but they set up an instant pre-authorised tab through the Flypay app; payment automatically completes at closing time.
Benefits for consumer:​ Easy, convenient way to set up a tab without the risk of leaving a card behind the bar; friends can join the tab at any point during the evening; can easily choose how the bill is split.
Benefits for pub:​ Like any bar tab, ‘Pay at Bar’ can increase customer spend; avoids the risks associated with holding credit cards behind the bar; no need to spend time dealing with forgotten cards.
Fee:​ Undisclosed

4: Flypay ‘Pay at Table’​

What it is:​ A payment app that lets a customer check, split and pay the bill without the need to flag down a waiter.
How it works​: Customers scan an on-table QR code or NFC tag to check their bill and pay using a credit or debit card that they’ve linked to the app.
Benefits for consumer:​ According to Flypay, the ‘Pay at Table’ app cuts down the time it takes to pay for food at the end of a meal from about 10.5 minutes to 1 minute; the bill can be split with others at the table, either per item or via a percentage split.
Benefits for pub:​ Encourages repeat custom; front-of-house staff can spend more time serving, rather than sorting out the bill; minimal training requirements.
Installation:​ Remote installation, integrated with existing EPoS system.
Fee:​ Fee based on a pub’s size and turnover.

5: Apple Pay​

What it is:​ Mobile payment
How it works:​ A user simply holds their iPhone 6/iPhone 6s, Apple Watch or iPad near a terminal that accepts contactless payment; the payment card they’ve set as a default is called up, prompting a Touch ID action to authenticate the transaction. Apple Pay can also be offered as a payment method within apps.
Benefits for consumer:​ Quick and easy payments; secure because card details are not stored on iPhone, card numbers not sent to the merchants, and fingerprint verification provides an added layer of protection compared to a contactless card.
Benefits for pub:​ Gives the customer a simple and secure way to pay with the mobile device they use every day.
Installation:​ If a pub already accepts contactless payments, it may already be set up to accept Apple Pay.
Fee:​ No additional fee.

The nuts and bolts​

The UK Cards Association​ — the trade association for the card payments industry — provides the lowdown on contactless payment:
What it is:​ A quick and convenient way to pay for purchases of £30 and under using a card or a mobile device without having to enter a PIN.
How it works:​ A contactless device — whether card or mobile device — contains an antenna to transmit purchase information to and from a contactless reader at a
payment terminal.
The device:​ Contactless payments can be made with a range of devices, including pre-paid, debit and credit cards, mobile devices such as a smartphone or tablet, wearable devices such as a watch or wristband, stickers and key fobs. A contactless-enabled terminal will be able to accept payments from all of these.
Higher value contactless payments:​ Contactless payments for purchases over £30 can be made through an app on a device like a smartphone. An added layer of customer authentication — a password or biometric identifier (like a finger print) — is required.
Security:​ Contactless payments use the same technology as Chip and PIN. Contactless cards have a range of additional security features. Fraud on contactless cards is fewer than one penny in every £100 spent. Anyone who is a victim of fraud gets their money back.

■ Further information can be found in the UK Card Association’s Guide for retailers: accepting contactless and higher value contactless payments​