GLOBAL PAYMENTS INSIGHT PAPER
Making Payments Pay In Hospitality
INTRODUCTION
The hospitality sector depends on the
delivery of a flawless customer experience.
Typically this consists of a warm welcome,
a friendly atmosphere, attentive service
and great food and drink.
The payment process plays an important
role in the overall impression that a
customer leaves with when they have had
a drink in a bar, eaten out at a restaurant or
stayed in a hotel.
Make paying quick, easy and safe and,
as long as the other parts of the customer
experience match the promise, the chances
are you will have a satisfied customer on your
hands, one who is likely to come back as well
as tell their friends about you.
Businesses both big and small right
across the hospitality sector can benefit
from new payment technology – accepting
credit and debit cards plus prepaid devices
to improve the customer experience,
increase turnover and ultimately improve
profits. Here we explain those benefits.
SPEED
Hospitality outlets can perfect every aspect
of their venue, from the seating to the lighting
to the service, but waiting for too long to pay
can ruin a customer’s experience.This is true
for any number of establishments. No-one
enjoys waiting for 20 minutes at a bar, or trying
to catch a waiter’s eye repeatedly at the end
of a meal. At the same time, overstretched
staff servicing a packed pub or 20 covers
are equally frustrated by the time it takes to
process their customers’payments – long waits
rarely result in bigger tips after all. For owners,
it reduces the number of customers that
can be served in any given time, hitting
potential takings.
Electronic Point of Sale (EPOS) is also
transforming the billing and payment
process, which allows customer orders to
be synchronised between the EPOS and
till. Staff are able to produce bills instantly
upon request from handheld terminals –
so customers can potentially settle their bill
in under a minute. This hugely improves
the customer’s overall experience while
enabling establishments to turn their tables
much more quickly during busy periods,
resulting in a boost in takings. The outcome is
more satisfied customers, bigger turnover,
happier staff, and of course, bigger tips.
FOOD & DRINK:
UK Average transaction values (ATV)*
7,000
ATV £9.87
6,000
Segment transactions (m)
New payments technology is finally solving
this problem in a number of ways. One
of the most obvious is with contactless
payments. In contrast to paying with
cash or using a chip & PIN payment card,
the time it takes to complete a transaction
can be cut to a matter of seconds – this
means profitability is also increased
as more customers can be served.
Shaving just a few seconds from each
transaction, when multiplied by hundreds
of paying customers, quickly adds up to
a significant amount of prospective
revenue. Given its tendency to be used for
low value payments, it can also reduce
the amount of cash takings and the costs
associated with it – not forgetting that research
has shown customers tend to spend more on
plastic than they do with cash (see graph).
In 2012, a US study by MasterCard found
that its Paypass (contactless) card customers
were spending on average 30% more since
receiving the cards, regardless of how much
they spent overall.
ATV £10.59
ATV £10.67
ATV £10.94
5,000
4,000
3,000
2,000
1,000
ATV £38.00
ATV £34.82
ATV £32.26
ATV £29.84
0
2009
2010
All transactions
*Payment Systems Europe Ltd 2013
2011
Card transactions
2012
SECURITY
Some businesses within the hospitality sector,
primarily pubs, bars and restaurants,
are particularly exposed to the risk of fraud
and human error. For example, a mistake
calculating a drinks bill at the end of the night
with a customer paying less than they should,
or deliberate fraud by a member of staff who
charges a higher amount than the customer
owes and pockets the difference.
In pubs and bars, which have historically
relied almost exclusively on cash for payments,
these problems are even more acute.
Electronic payments can make a real
difference to the security and reliability of
customers settling their bills while reducing
fraud. For example a portable terminal,
which is brought directly to the customer’s
table, prints off an itemised bill for the
customer to review. The terminal processes
the payment via chip and PIN with the
card remaining in full view of the customer
at all times.
The terminal works by synchronising
with the point of sale (POS) system through
which orders are placed to generate the
bill. There is no chance of human error in
transferring the amount due, so customers
cannot be over or under charged. And it
eliminates the risk of staff fraud which can
result from manually entering a different
amount to that shown on the bill.
Any hospitality outlet licensed to sell
alcohol runs the risk of losing stock. Here
too electronic payments can reduce this
problem. You can now wirelessly synchronise
spirit bottle dispensers with the POS – so it
is impossible to pour a measure without it
being recorded. This protects stock against‘
generous measures’ and makes sure
customers pay the right amount for what they
consume. A similar mechanism can now track
pints as they are pulled too.
ACCEPTANCE
Successful business approaches in
hospitality are all about making guests feel
welcome, and being able to accept
whichever card they carry in their wallet
plays a big part in this. Historically, many
international visitors have not been
able to pay in the UK with the debit and
credit cards that they use at home, which
can put off potential visits from overseas,
especially from high spenders who do not
want to or simply can’t cross borders which
large amounts of cash.
While MasterCard and Visa make up
the overwhelming majority of cards in the
UK, this is not the case worldwide. The
Discover network, to name but one, includes
five different major card schemes.The
Diner’s Club card covers 185 countries and
is a favourite for corporate spenders; the
Discover card counts 58 million cardholders,
the South Korean BC Global Card
represents 55 million and RuPay is
affiliated with India’s 10 largest banks in a
population of 1.2 billion.
Diners card members, for example,
typically have their card at the front of their
wallet and are heavily rewarded with points
and incentives personally, so they will
actively seek out opportunities to spend on
their card. Not accepting these cards is an
exampleofan‘invisiblerevenuekiller’thatmany
outlets tend to overlook, and it carries a huge
opportunity cost.
However, developing technology and
growing global partnerships between
payment processors are opening up the
number of international cards that can be
accepted in the UK. This is a fantastic
opportunity for hotels and restaurants to
market themselves to overseas visitors and
increase their share of tourist spend.
UnionPay, China’s dominant card
network, was introduced to the UK for
the first time in 2012, and the hospitality
sector is already reaping the rewards.The
Ritz, for example, enjoyed a 20 per cent
boost in spend from its Chinese guests
when they started to accept UnionPay
cards, as well as attracting more Chinese
visitors overall.
Opening up card acceptance takes away
any cash restriction for your customers,
resulting in bigger, repeated spend from
overseas cardholders, and helping you to
compete for tourist visits in an increasingly
competitive international market.
CUSTOMER RETENTION
New payments technology represents a
whole host of potential business opportunities
for the hospitality sector. One of the newest
areas, which is likely to develop rapidly
over the next few years, is in customer
retention and loyalty. A major drawback to
cash payments is that they are
anonymous. There is no way of identifying
who is spending, how much and when.
However, mobile and card payments,
particularly when used with loyalty apps
and cards, allow outlets to know who exactly
their customer base is, how much they are
spending, and on what. The technology in
this area is likely to become widely accessible
as mobile payments are adopted by
UK consumers, and establishments that take
the initiative now will be well positioned to
leverage this opportunity when it arrives.
Collecting data about your customers,
provided that the process is fully transparent,
will enable you to design strategies to
encourage repeat business from them.
Cafes, for example, can reward their frequent
lunch customers with discount vouchers
delivered straight to their handset. Bars can
invite valued customers to exclusive VIP
events – by identifying their biggest spenders
on other nights of the week.
Customer data is an enormously valuable
commodity, and while these techniques are
still relatively new to the hospitality sector,
they are likely to become much more widely
used in the near future. In the retail sector,
data-driven targeted marketing strategies
are already commonplace thanks to the
option of being able to gather information
about valued and loyal customers when
they make electronic payments online.
The rise of EPOS will play a similarly important
role in this process by gathering data about
particular customers’ orders and their
preferences, encouraging return visits
and higher spend.
THE HIDDEN COST OF CASH
When you stop to consider the impact that
technology has had on our lives in recent
years, it is perhaps surprising that the use
of cash to pay for things is still so widespread.
However, cash carries many “hidden” costs
which are not always obvious to customers
and retailers. These costs add up through
the whole cash cycle and cover things such
as transportation, insurance, cash handling,
security and loss of interest. Everyone in
the payments chain picks up some of this
expense including the hospitality sector
and your customers.
While we are unlikely to see a cashless
society anytime soon, there are signs that
new payment methods are starting to edge
out cash in many everyday transactions,
driven in large part by the ready availability
of technology.
The real game changer in this area is
likely to be the use of smart phones to make
mobile payments – when customers become
accustomed to tapping their phone to pay for
everyday items.
And while for larger value transactions
spending on plastic has developed a clear
lead, a huge opportunity exists for card
payments to make headway into paying for
low value, everyday items – such as a coffee
on the way to work, a sandwich at lunchtime
or a drink in your local.
While cash will never be fully replaced,
there is a clear time and cost imperative
for the hospitality sector to reduce reliance
on it as payment for the goods customers
buy everyday.
SOMERS TOWN COFFEE HOUSE:
MAKING THE MOST OF NEW TECHNOLOGY
For Somers Town Coffee House in Euston,
new payments technology is paying
dividends for their customer service. The
company will soon be installing Global PAY
Now, allowing staff to produce bills instantly
from handheld terminals, as explains Owner
Anthony Pender.
I did no cash transactions I would be very
happy.” Moving to card has also simplified
the accounting and cashflow processes for
Somers Town – and removed the possibility
of staff fraud through cash theft, which is an
unfortunate reality of working with notes and
coins in the hospitality trade.
“Our venue is over three floors, and if you
are running up and down the stairs and going
behind the bar to print the receipt it all takes
time. With PAY Now we can do the whole
transaction at the table, so it means that we
are saving four to five minutes each time.
Obviously, the last thing that people do is
pay the bill before they leave. You can deliver
fantastic service, but if they have to wait for a
long time to do this, that whole service breaks
down and the lasting impression of you is one
of mediocrity.”
“I think every business that handles cash
has that problem – we have had one serious
incident in the last six years and a couple of
minor ones. They always get caught but this
doesn’t help you at the time when you have
to go through that process. If we could avoid
that entirely, it would be amazing and make a
much more pleasant working environment.”
Anthony says that they had never thought
about this process until the technology
became available. “It is great for small
businesses to have this kind of technology at
the end of the day.”
Currently, Somers Town accepts cards
via Chip & PIN – as Anthony explains, the
proportion of cash versus plastic is dropping.
He estimates that in the past five years of
trading, cash has fallen to around 40% of
takings. This carries many advantages for
the pub, not least in improved security and
reduced fraud and insurance costs.
“The less cash on site the better. Premiums
are going up now and the more business the
site gets the harder it becomes to insure it. So
we want to be carrying less cash.”
“We also have to be very aware that staff
behind the bar can become a target, so for
us taking cards is really important. The costs
now aren’t much different between putting
cash in the bank versus the transaction costs
of the card.” He says that depositing cash
can take three staff to go to the bank, all of
whom must be insured to carry it. In addition,
that is three people out of the pub – impacting
on customer service.
“Then there’s obviously the additional time
and costs of doing change runs when you
need pound coins and so on. These things
all take time, they all need management; if
For Somers Town, new technology
is transforming the way they approach
their customer service, and payments are
playing a significant role in that. For their
business customers, they are installing a
new synchronised point of sale system so
customers can receive email receipts the
next day for their expenses – which in turn
acts as a check on fraud. Anthony is also
overseeing a new online ordering system
which will allow their customers to both order
and pay for food online – so making the most
of their lunch breaks.
Their progress so far has shown the
positive impact payment technology can
have on revolutionising both the customer’s
experience and streamlining their own
business. “Ultimately, it gives us back more time
to look after customers,” Anthony concludes.
SUMMARY
Developments in new payment technology represent a whole host of opportunities to boost
your takings, reduce fraud and improve customer retention. Any business in the hospitality
sector, no matter how big or small, can benefit from changing the way they take payments,
and take advantage of the new innovations coming to market ever more rapidly.
CONTACT US
For more information, please contact us at
Global Payments
51 De Montfort Street
Leicester LE1 7BB
Phone: 0800 731 8921*
Website: www.globalpaymentsinc.co.uk
*Lines are open 9am to 5pm Monday to Friday (excluding public holidays).
For any PR enquiries,
please contact Sophia Morrell at Greentarget
on 0207 324 5480.
Global Payments is HSBC Bank plc’s preferred supplier for card processing in the UK.
Global Payments is a trading name of GPUK LLP. GPUK LLP is authorised by the Financial Conduct Authority
under the Payment Services Regulations 2009 (504290) for the provision of payment services.
GPUK LLP is a limited liability partnership registered in England number OC337146. Registered Office: 51,
De Montfort Street, Leicester, LE1 7BB. The members are Global Payments U.K. Limited and Global Payments U.K.
2 Limited. Service of any documents relating to the business will be effective if served at the Registered Office.
© GPUK LLP. All rights reserved.
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