Andy McMahon was uncertain about the effect PIN-only credit cards would have on his business. Like many restaurateurs, the MoVida co-owner didn’t know how he’d replace a time-honoured ritual: delivering the cheque, collecting a card, waiting for a signature. So, he began to investigate other options. “The industry was perhaps a little bit confused as to what was happening with the PIN-only system,” says McMahon. He wanted to try something new and get ahead of the game, so: “We sat down with PayPal, heard ’em out and saw the technology first hand, and thought it was pretty simple and worthwhile.”
And that’s the thing. The system is pretty simple. By linking a bank account, credit or debit card to a PayPal account, anyone can securely purchase stuff online … and, it’s just the same in real life. Customers “check in” to a cafe, restaurant or bar and transfer their payment with their phone, via the app. Staff can check who’s paying via a friendly mugshot on their point-of-sale system.
As an incentive for businesses and customers, this October 13 PayPal are running a 1 Cent Coffee Day. All day, customers with the PayPal app will be able to go in to any venue with the PayPal system and buy a coffee for 1 cent.
When the promotion was run in Sydney, thousands of coffees were sold as new venues signed on and new customers downloaded the PayPal app. While signing up as a customer is a reasonably quick process, signing up for venues can take more than a week, so interested cafes (who can head here for more info) must be live in the PayPal app by October 3. More than 5000 Australian vendors are already using the PayPal system, and the app has more than one million users.
Dante Ruaini, partner in Huxtable and Huxtaburger, is another convert to PayPal’s digital payments. After experimenting with the Aston Club point of sale system, he decided to give PayPal a go. “The Aston Club’s more suited to bars where it’s set up to do tabs,” he explains. “As it turns out, it doesn’t really suit Huxtaburger because the transactions are a lot faster.”
The Collingwood branch of the wildly popular burger joint was, previously, run entirely on cash sales, so the PayPal solution is relatively high-tech. “Collingwood has always been a cash-only business for us,” he says. “So this opens up convenience for more customers.”
Regardless, setting up the payment process has been easy enough. “Once you get it up and running it’s fast,” Ruaini explains. “A customer’s face appears on our tab screen, we touch that and process the order. It’s really straightforward.”
Likewise, McMahon is convinced by its ease of use. “The fact you don’t have to leave your table to sign anything or do anything really works,” he says. “It’s very convenient for us. It’s less work than signing a slip and taking it across, checking a signature and getting it back to the customer.
“It saves us taking across a terminal so they can punch in their own pin. There’s no transactional monies taken too-and-fro, and it’s just going straight to our bank account.”
From a vendor’s point of view, McMahon also believes the system is more secure than the traditional bar tab, where many establishments have been ripped off with fake cards. “I think there are real advantages when it comes to a bar,” he says. “You don’t have to run a tab for 30 people with a number. You can put it on your tab and it’s a lot more secure for both the venue and the customer.”
PayPal’s communications manager, Adrian Christie, believes that beyond security and convenience, the system provides an opportunity for a new kind of dialogue between customers and vendors. “The additional benefit for the retailer is that you’re presented with the consumer’s name and their photo. You can start to build in loyalty programs with that consumer. All of a sudden, it’s ‘G’day Tim; here’s your coffee, mate’,” he says. “As the provider of a service, you’ve got an accurate knowledge of how valuable that customer is, that comes to you in real time, and maybe what you can offer them.”
Christie believes that though there’ve been rumours of cash money’s demise for years, the rise of the digital wallet is finally upon us. “ATMs have been in the market for some 40-odd years. But it was only last year that we saw the reduction in withdrawals for the first time. That coincided with the tipping-point of mobile phone take-up,” he says. “For a consumer, getting three bucks out of your pocket is convenient. A credit card is equally convenient. But if you can create a two-way dialogue with the consumer and the vendor, that’s the sweet-spot.”
Interested venues can contact PayPal directly or approach its POS provider about accepting PayPal. To participate in 1 Cent Coffee Day on Monday October 13, businesses must be in the PayPal app by Monday October 3.
Broadsheet is partnering with PayPal on 1 Cent Coffee Day. More details in coming weeks.