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Daily news and analysis about the food tech revolution

mobile payments

eMarketer: In-Store Mobile Payment Use to Hit 101 Million in the U.S. This Year

More than 101 million Americans over the age of 14 will use in-store mobile payment apps to make purchases this year, up from 92.3 million last year, according to recent research from eMarketer (tip of the hat to TechCrunch).

The research firm said this milestone follows 29 percent year-over-year growth for mobile payments in 2020, and that usage is on track to surpass half of all smartphone users by 2025. Additionally, eMarketer predicts that the average annual spend per user will grow 23.6 percent to $2,439.68 this year, and will break $3,000 by 2023.

EMarketer attributes this growth in point-of-sale mobile payment adoption to the pandemic, as consumers sought out contactless retail experiences. This desire to minimize the number of touchpoints when paying for stuff translated into an acceleration of user and transaction value growth.

EMarketer forecasting analyst, Osar Orozco at Insider Intelligence said that the greatest increase in new users were Gen Z and millennials. “We project that there will be around 6.5 million new mobile wallet users per year from 2021 to 2025, of which more than 4 million will be Gen Zers. Millennials will continue accounting for around four in 10 mobile wallet users, although that share will shrink,” Orozco said in an eMarketer blog post.

Among the mobile payment systems, Apple Pay is tops with 43.9 million users in 2021. EMarketer says that Apply Pay will add 14.4 million users between 2020 and 2025. Starbucks is in the number 2 spot followed by Google Pay.

All of this tracks with what we’ve seen from the foodtech world over the past year. Big retailers like Walmart and Amazon’s physical stores have been upgrading their contactless payment options. The Apple Clips feature makes mobile payments easier by not requiring a full app download for every different store you want to buy from. A number of third-party companies were quick to bring contactless payment options to restaurants throughout last year. And even vending machines fast-tracked adoption of contactless payment methods.

Despite all that progress, eMarketer says that there are two factors that still hamper even wider adoption of mobile payment systems. First, setting up mobile payments remains complicated for many users, and many smaller businesses can’t afford the hardware and software necessary to enable mobile payments.

CardFree’s Streamlined Platform Hints at the Restaurant Tech Stack of the Future

We’ve said it before, we’ll say it again: in today’s pandemic-stricken restaurant industry, restaurant tech companies have to fight hard to stay relevant, and only those solutions that can help restaurants make their digital operations truly efficient will be left once the fallout is over.

CardFree, a company based in San Francisco and something of a restaurant tech vet, is hoping to make the transition to digital easier for restaurants. The company makes an all-in-one mobile merchant platform that integrates digital ordering and payments, coupons, and loyalty programs into a restaurant’s existing setup. It also offers a pay-at-the-table function that uses a customer’s own mobile device, rather than a tabletop kiosk (aka germ repository). It also recently added a new way for customers to process payments — not through any earth-shattering new technology but via some good old-fashioned SMS messaging with its new text-to-pay function.

The company was founded in 2012, a time when the concept of mobile payments via a smartphone was first gaining attention and many wondered if the credit card would disappear entirely. It didn’t. In fact, CardFree’s CEO and cofounder Jon Squire told me over the phone this week that the company saw “early resistance” even to pay-at-the-table concepts, where a user processed the payment themselves instead of handing over a credit card.

As global health crises do, though, the COVID-19 pandemic changed everything. Digital orders were up 63 percent in March, according to NPD Group, and one recent survey found that 73 percent of consumers ordering takeout and delivery said they would be more inclined to get takeout (over delivery) if the experience were contactless. Meanwhile, the National Restaurant Association’s restaurant reopening guidelines clearly state that “Contactless payment systems, automated ordering systems, mobile ordering apps, website updates and simple texts can help you to communicate and conduct business with reduced need for close contact.”

CardFree’s platform is one of many out there offering tools to make the restaurant experience more contactless. A restaurant can choose one or more of the technologies the company offers (mobile ordering, payments, etc.) and add to the stack over time. Squire said that of all the technologies out there, mobile ordering itself is probably the most important one for restaurants to add right now, though in terms of a solution, “You’re going to want something you can expand.”

As I mentioned above, that expansion might include some SMS messaging. CardFree has launched what it calls a pay-to-text feature, where customers call in a to-go order and can receive a link via SMS to pay for their meal. This is less cumbersome than reading a credit card number over the phone, and more sanitary than passing one between customer and cashier at the actual restaurant.

“Almost all the folks we’re working with are taking the person’s cell phone number as part of the order process,” says Squire. Once the phone number hits CardFree’s system (which is integrated with the restaurant POS), the user receives a text with a link they can click through to pay using Apple or Google Pay or their credit card:

Squire said that of the restaurants he’s talked to, many still see “about 60 percent” of orders placed ahead of time come via a phone call to the restaurant, not placed through a digital property like a mobile app. Finding a way to make the telephone experience more contactless from start to finish will be important going forward. That said, not many restaurant tech solutions pushing “contactless” bundles currently offer any kind of feature that addresses phone orders. That gives CardFree something of a leading edge here.

Squire doesn’t necessarily believe the pandemic and seismic shifts in the restaurant biz will render the credit card obsolete, as some have suggested. Of going “card free,” he said “Doing it’s our name and we’ve been doing it for 10 years and [credit cards] still exist. I’m reticent to say they’ll go away.” 

Regardless, restaurants will need to go more digital, even if they’re accepting credit cards. And to help make that possible for cash-strapped businesses that are currently lucky to keep the lights on, CardFree has been giving away its products for free for small-to mid-sized independent restaurants. While there is technically a three-month time stamp on the free period, Squire suggests that’s a fluid deadline where certain restaurants are concerned. For CardFree, which has historically worked with enterprise-level brands, this is a way of helping the whole restaurant industry stay afloat, not just mainstream chains.

As Squire said, “It’s been helpful to know [we’re] doing something to push this in the right direction.”

Starbucks Leans on Digital Orders and Modified Formats to Reopen 90% of Stores by June

Starbucks plans to reopen 90 percent of its U.S. stores by early June, the company said this week on its Q1 2020 earnings call. As expected, stores won’t immediately reopen nationwide and with the same sit-down cafe format in which they operated before the pandemic. Instead, the Seattle-based coffee giant will open gradually, with modified service that emphasizes pickup, delivery, and drive-thru. 

The company hinted at these plans a little less than two weeks ago, when company CEO Kevin Johnson sent a letter to employees explaining the chain’s recovery plan. As I wrote at the time, Starubucks is an international chain that is already navigating this recovery process in China, so it has some experience other U.S.-based chains may not. It is also ahead of the curve — a major leader, actually — in both off-premises formats and digital business. 

On this week’s call, Johnson spotlighted both of those things. He noted that “continued recovery in China strengthens our belief that these impacts [from COVID-19] are temporary” and that Starbucks expects to emerge with an even stronger business. “We are well positioned to leverage our digital assets and new operating formats like contactless pickup and curbside to expand service to customers,” he said.   

Only 30 stores will reopen their cafes, Starbucks COO Rosalind Brewer said during the call, and there will be no seating in those locations. “We will amplify delivery, we will have the Mobile Order & Pay channels open and then the addition of a new concept, the Entryway Handoff,” she said. Starbucks will monitor what happens in these stores before making the move to reopen other locations. 

For Starubucks, this slow reopening is less detrimental than it might be for a chain with a less robust off-premises strategy. Johnson noted on the call that 80 percent of customer occasions in U.S. stores were to-go before the pandemic even hit. “And so by augmenting the in-store experience with mobile ordering and contactless pickup, we can service significant volume of customers without having the cafe seating area actually opened,” he said. 

As states slowly begin to reopen their economies, bigger chains with similar store formats to Starbucks and existing digital strategies in place will likely operate with their own versions of this modified, to-go-centric format. Chipotle, which was already testing off-premises store formats pre-pandemic, has reported strong digital sales for the quarter. With more earnings calls set to happen over the next few days, we’ll get more intel into what other chains, such as McDonald’s, have in the works.

Smaller restaurants that can’t afford expensive mobile-order systems or accommodate drive-thru lanes can still look to some tech to help with the transition towards this new normal. While most independent businesses are more concerned with keeping the lights on right now, contactless customer service and digital payments will be two areas more restaurants will look to expand to in the coming months. 

McDonald’s Partners With Adyen to Launch Mobile Payments Tech Worldwide

McDonald’s has struck a deal with international payments platform Adyen NV, which will receive and process payments made in the chain’s mobile app, according to a press release from Adyen.

The agreement will make Adyen’s payment platform available to McDonald’s locations starting in the U.K. in early 2020, with plans to expand internationally in the future.

Adyen’s claim to fame is that its system makes running and implementing mobile payments easy for businesses. Using what Adyen calls its “unified commerce experience,” businesses can more easily accept any type of digital payment across sales channels (e.g., mobile app, kiosk, etc.), add new ones, and create a consistent order and pay experience for customers across regions. In other words, ordering via the McDonald’s mobile app in China would look, feel, and function much the same as in the U.K., with the system automatically adjusting features like language, currency, and country-specific payment methods. 

Adyen counts a number of high-profile clients on its roster, including Spotify, Uber, and Bonobos. In the food world, the company’s portfolio of restaurant companies is growing, too, with Domino’s, Dunkin’, and Deliveroo all using the Adyen system. 

The benefit for McDonald’s here is scale. Because Adyen’s technology makes it easy to add payment methods and onboard franchisees, McDonald’s can, in theory at least, more quickly roll out a consistent order and pay experience across the globe. That frictionless experience for customers will be important for McDonald’s, who expects delivery to drive $4 billion of global system-wide sales in the future. Already, the chain has invested in plenty of technologies to help meet this demand. In March, the chain acquired AI company Dynamic Yield to improve menu personalization. More recently, in September of 2019, McDonald’s acquired voice-tech startup Apprente. Former CEO Steve Easterbrook — who many saw as the driving force behind all this tech — departed from the company in November, but that hasn’t slowed down any of McDonald’s tech ambitions.

Meanwhile, Adyen’s Chief Operating Officer Kamran Zaki hopes to eventually expand the new partnership to more than just mobile payments. Adyen currently offers a number of other payment platforms, including in-store kiosks, and mobile POS systems.

Coffee Bean Launches Mobile Program With Uber Integration

Not to be outdone by Dunkin Donut’s next generation store that emphasizes mobile ordering, L.A.’s favorite coffee chain, Coffee Bean & Tea Leaf, just announced mobile ordering for select company-owned locations.

Like other mobile programs, Coffee Bean’s pay ahead ordering allows mobile customers to skip the line for their drink. Those who use the feature will earn extra Rewards points and have access to special discounts. As of today, the feature is available in 191 company-owned store locations around Southern California and Arizona. Coffee Bean plans to make the feature available to franchises and “new geographic areas” in the coming year.

One added bonus: the app is integrated with Uber. That means you can use the Coffee Bean Rewards app to both pay for your drink and order a ride to your preferred store location.

Taco Bell did a similar program with Lyft last year, allowing customers to make a detour to the nearest Taco Bell drive thru en route to their destination. The move was a complete disaster; many drivers were upset at being forced to sit in long drive-thru lines during peak traffic hours, for no additional compensation. Lyft eventually had to clarify that Taco Mode, as the program was dubbed, was optional for drivers.

Uber already has a rocky history in terms of its relationship to drivers. If drivers start tweeting about spilled lattes ruining their cars and long drive-thru lines, we may have another Taco Mode on our hands. Then again, coffee and fast-food burritos tend to serve different markets. At the risk of generalizing, bad smells and messy spills seem much more likely with a late-night crowd that wants fast food en route to the club, rather than someone on their way to a meeting who needs a caffeine jolt. So Uber may fare a little better with this deal.

Nation’s Restaurant News noted that mobile payments for restaurants have jumped 50 percent over the last year. So while it seems a bit late in the game for Coffee Bean to be joining the mobile ordering movement, it’s still an opportune time to do so. Plus, Coffee Bean customers tend to be fiercely loyal, which bodes well for the company, at least for this initial rollout.