ISOs Are Bullish About Pay-at-Table Market Despite Sour Economy

Although observers report the economic downturn has soured many restaurants on so-called pay-at-table technology for the time being, some independent sales organizations see opportunity in the market and are moving ahead with plans to exploit it. Alpine Payment Systems, an ISO in Vancouver, Wash., that processes payments for about 100 restaurants, has over the past four months installed wireless terminals from Ingenico in most of them to allow customers to swipe their cards at the table. Indeed, Robert Ensminger, president at Alpine, predicts his company will be signing up between 200 and 300 restaurants a month for pay-at-table within six months. “It's something I believe in,” Ensminger tells Digital Transactions News's sister publication, Digital Transactions magazine. “We've invested quite a bit in [pay at table].” Meanwhile, International Merchant Services Inc. is planning a pay-at-table test with three unnamed restaurant companies, a national chain, a local chain, and a small independent eatery. Altogether, nine or ten locations will be involved in the test, which IMS hopes to get under way this fall and conclude by next spring. Each restaurant will test equipment from three terminal vendors. Don Smith, president and chief executive of the Westmont, Ill.-based ISO, tells Digital Transactions the purpose of the test is to establish the extent to which restaurants might benefit from pay-at-table technology. “I want restaurants to tell me what are the benefits, and what are the pitfalls,” he says. With pay-at-table technology, servers bring a wireless terminal to the customer's table, allowing the customer to swipe his card for payment on the spot. Proponents of the technology say it improves security, since the card never leaves the customer's possession, and boosts table turns. Since many of the devices on the market incorporate a PIN pad, the technology also allows restaurants to convert what had been predominantly credit card transactions into PIN debit payments, which are significantly less expensive to accept. The concept is much newer in the U.S. than in Europe, and relatively few restaurants have yet rolled it out to all or most of their locations. Now, say some observers, the economic slowdown has stalled plans at some restaurants to roll out pay-at-table as restaurant officials wrestle with rising food costs and squeezed margins. “Despite the value proposition, more fundamental concerns are moving up the priority list,” says George Peabody, director of the emerging technologies advisory service at Maynard, Mass.-based Mercator Advisory Group, in an e-mail message to Digital Transactions. Peabody says terminal vendors like Ingenico, ExaDigm Inc., Hypercom Corp., and VeriFone Holdings Inc. shipped about 20,000 devices into the U.S. pay-at-table market in 2007 and predicts that number will not rise this year. But ISOs seem to be optimistic that the doldrums won't last long. Ensminger sees pay-at-table as a virgin market for terminals, making for an easier sell than a replacement market. “In the past, we'd try to sell equipment to people who already had equipment,” he says. Plus, he argues, consumers will want to use debit cards to pay for their meals, allowing restaurants to save what he estimates as up to 50% on transaction costs. And, he adds, the security of leaving the card in the customer's hands appeals to restaurateurs wary of card-data theft by unscrupulous employees. IMS's Smith isn't sure yet what to expect from his company's pay-at-table tests, but suspects “the pros will outweigh the cons.” [For the complete story on the pay-at-table market, see “Getting on the Menu” on page 14 of the upcoming October issue of Digital Transactions magazine, due out Oct. 1].