This article originally published in Self-Service World magazine's special section, FOCUS: Restaurant & Hospitality Self-Service, May 2007.
The scenario is a familiar one played out millions of times a day: A restaurant server brings the check to the table, the customer hands her a credit card, and the server takes it to a terminal where it's swiped and charged for the amount of the meal.
At least that's what the customer hopes will happen.
"You trust it's only going to be billed for what you ate, but you really don't have any idea what happens to it," said Wayne Steiger, president and chief executive of CTS Consulting Group, a pay-at-the-table (PATT) solutions company.
"Consumers are very aware now that if their card is out of their sight, there's a chance they could get scammed."
Proof that non-restaurant retailers are working to fight credit card fraud can be found in the growing number of consumer-facing card terminals in their stores. Retailers know that if the card never leaves the customer's sight, their liability for fraud is eliminated.
Rob Regan, vice president of hospitality services for card terminal manufacturer VeriFone, said surveys confirm customers want greater security at full-service restaurants where servers take guests' cards.
"They asked, ‘How concerned are you about your payment information when a server walks away with your card?' And 60 percent of the people said they are concerned or very concerned about it," Regan said. "They're very aware of the risk, but in restaurants, there aren't a lot of options for customers. They're just sort of dealing with it and waiting for the other shoe to drop."
Some of Adam Greenberg's customers at Potomac Pizza are so concerned about credit card fraud they won't use cards at restaurants. "They take something like that very personally, as a huge violation of their privacy. So they just pay cash."
Potomac Pizza is participating in a test of a PATT solution Greenberg believes will ease customer concerns about card fraud. If a customer offers a card for payment, a server presents a wireless, hand-held device that allows her to complete the transaction without giving up the card.
For years, Steiger has campaigned for the adoption of such technology in restaurants, an industry he views as the last major bastion for easy card fraud. Changing to this new technology will cost operators, he said, but the move will pay for itself and leave customers more satisfied and secure.
Pay-at-the-table pays for itself
Steiger estimates the cost for a wireless PATT system for a full-service restaurant will cost between $10,000 and $15,000 for software, the setup of a wireless local area network (WLAN) and hand-held terminals. At about $750 per hand-held terminal, restaurateurs will have to be both judicious about the number they purchase and diligent in training employees to care for them.
Since quick-service restaurants will have terminals only at the counter and the drive-thru window, a system likely would cost considerably less.
For being one of the world's most technologically advanced countries, Steiger said the United States is "about 10 years behind the curve" on PATT systems. They're widely used in Europe, he said, along with smart card systems. He believes two forces — consumer demand and reduced costs for the restaurant operator — will combine to hasten PATT acceptance here.
"On a business lunch, you've got a time limit, and one of the longest points in the whole experience is when you're waiting to pay," Steiger said. "Customers hate to wait, and sometimes I've waited 11 minutes for the server to come back with my card when I paid the bill. To be able to swipe your card, close the transaction and leave the device on the table … customers will love that."
Jay Foley, executive director of the Identity Theft Resource Center, said customers want the peace of mind gained by maintaining full control of their cards. He believes a PATT solution would be a draw for customers, as well as a marketing tool for operators. "You can actually advertise that you have secure credit card processing at the table. Imagine how wonderful that would make customers feel."
Potomac Pizza's Greenberg said 95 percent of the customers using the PATT terminal "were very positive about it once we showed them how to use it." The only group uncomfortable with it was seniors.
Greenberg said comments from his staff convinced him PATT will be adopted widely and soon as customers become used to it. Sometimes change is uncomfortable, he said, but "when they see it's to protect them, they're willing to change." He said his servers love the wireless terminals because they can leave them at the table and move on to other duties.
Operators will benefit in many ways from PATT systems, Foley said, particularly in the area of reduced liability. Since all PATT transactions are card-present and are closed by the customer, fraud concerns disappear.
"If your customer comes in and says you stole his credit card number, you can tell him that's impossible because you never had the card," he said. "You tell them you brought the machine out, he ran the card through, he printed the receipt and he signed it. We never touched it."
Regan said VeriFone's research shows more customers want PIN-debit transactions at the restaurant level, not only because they're more secure, but because they use debit cards for modest restaurant purchases. Credit cards, he said, are reserved for high-dollar purchases.
Regan also said surveys done following one of VeriFone's PATT pilots revealed 85 percent of customers believed a PATT transaction was much faster when they controlled it. Steiger concurred and said quicker table turns are a proven benefit of PATT. "Faster table turns mean I'm going to get more customers into my place, and that's more money in the register."
Where operators will save the most money is in reduced transaction fees. Normally, a credit card payment entails two fees: one for the authorization, another for adding the tip and ending the transaction. With PATT, there is only one transaction and one fee. Plus, all transactions are card-present, which makes them less expensive. Throw in PIN-debit, and the transaction cost is even lower.
All cost savings aside, Foley sees reducing card fraud and identity theft as PATT's main goal.
"Identity theft sometimes ruins people's lives, and I'm not sure that people know how serious it can be," he said. "It's no longer a petty crime. Organized crime is involved in stealing billions of dollars a year this way."
Steiger said his passion for PATT was ignited in 2003, when his card was skimmed while paying for a meal in a restaurant. It led his former company, Communication Transaction Solutions, to develop the integrated pay-at-the- table technology to stop card fraud in an industry where the potential for it is, in his words, "horrendous."
"When the restaurant industry starts to adopt these measures, then we've eliminated one more potential avenue of concern as far as our plastic is concerned," he said. "We're slamming the door on this so it will never happen again."
This is an excerpt from "Cut credit card fraud with pay-at-the-table-technology," a free how-to guide from Self-Service World's sister site, FastCasual.cm. Click here to request a PDF of the guide.
