E la Carte Digitizes Restaurant Service

A number of applications are now being developed to digitize service at restaurants.  E La Carte, a US based company, has developed its own tablet, that let's diners book tables, order their food, play games while waiting, make their payment and provide feedback.

If used correctly, these tablets should not be seen as a replacement of physical waiters, but as a tool to increase sales, improve service and receive immediate customer feedback.

The team behind E la Carte claims that restaurants could see increases in sales of up to 10% simply by including pictures of their food in on the digital menus.  They should also see improvements in customer satisfaction, as customers no longer need to wait for waiters to make their orders and to receive the check and make payment.


From a payments perspective, it is interesting, but not surprising, to see that the payments process has been integrated in the tool.  This is a fantastic opportunity for the E la Carte, and similar companies, to intermediate the networks and extract a healthy profit. 

If they are successful at building a network of restaurants, they should also be able to gather valuable information about their customers; which restaurants they visit, what they eat, how much they pay, etc.  This could be fantastically useful for restaurants to fine tune their offerings and in tailoring marketing programs for the customer.

Seamless Receipts: $1.5M to Growth its e-Receipts & Marketing Platform

Seamless Receipts, a New York-based electronic receipts company, announced on Friday that it has received $1.5M funding from various venture capital investors.  The company delivers technology that enables merchants to replace paper with electronic receipts and deliver customized marketing messages.

The objective of SR’s solution is to drive offline customers online, improve engagement and increase sales.  To enable this, they offer basic components, such as email marketing, promotions and social sharing functionalities to more advanced solutions, such as group buying and reviews.

In additionally, SR has partnered with Fitzgerald Analytics to deliver simple but powerful analytics plug-ins.  With these components and with proper POS integration, SR can deliver:

·      Analysis of “shopping basket mix” (“What products do customers buy at the same time? How can they encourage larger purchases?)

·      Optimization of the timing, targeting, and content of messages to customers

·      Measurement of customer loyalty, return-visit incentives, and other data-driven tactics to improve marketing results

This is information that is generally not available to smaller merchants, unless they invest heavily in costly POS systems.

To support distribution of the system, Seamless Receipts announced a partnership with Canadian Retail Solutions (CRS) last year.  CRS provides POS solutions to small and mid-sized Canadian merchants and will integrate Seamless Receipts with its Retail Pro POS solution.  To support further growth, we would expect Seamless Receipts to announce more such partnerships in the time to come.

However, Seamless Receipts is of course not the first company to provide such services.  Apple has long used their email receipts as a marketing platform with customers and Square builds much of its business around the improved analyses it provides smaller merchants and opportunities to use receipts as a communication platform.

Still, not many stand-alone companies offer similar services, and Seamless Receipts’ independence and ability to freely partner with POS providers should provide a great platform for accelerated growth. 

Square and the Mobile Acceptance Devices

Square has become a bit of a media darling recently and received much press attention when they yesterday announced that they have closed their Series B funding round for $27.5 million led by Sequoia Capital, which values the company to $200 million.  Square is headed by Jack Dorsey, the co-founder of Twitter, and is benefitting from this association in the media.  However, it has also developed an exciting, new product that merits attention on its own.

Unlike most mobile payments companies, Square is not challenging the cards industry, but taking a more pragmatic approach that is likely to give greater payoff in the short term.  It works from the observation that everyone already have plastic cards and that this model works quite well for now. 

However, not all merchants are able to easily get card terminals and merchant agreements. Square has therefore developed a device that turns any mobile device into a card terminal and developed an approach that enables anyone to get set up to accept cards in minutes.  The technical innovation is a small, square card-reader that plugs into the phonejack of any mobile device and processes Visa, Mastercard, Amex and Discover cards. 

The device is cheap to produce and Square distribute them for free to merchants that sign up for their service.  This has proven very popular, with between 30,000 and 50,000 merchants signing up per month since launch in October 2010.  It is especially smaller merchants for whom it was previously not cost efficient or convenient to accept cards that sign up for Square.

It is primarily this market positioning that differentiate Square from other providers that have launched similar products over the last year, such as  Verifone, Intuit and HomeATM.  None of these have seen the same level of success, either due to more stringent merchant agreements, or possibly because they have been outshone by Jack Dorsey’s star power.

However, a number of market participants have warned against lacking security features on Square.  Essentially, Square relies on the mobile device to encrypt the magstripe data, whereas more secure devices perform this encryption at the magnetic head.  With Square’s approach there is a risk that the mobile device is hacked and that the credit card data is intercepted before it has been encrypted, and therefore exposing the cardholder to fraud.  

Moreover, Square and other mobile acceptance devices do not really tackle the bigger issues where cardholders and merchants hope to benefit from mobile payments.  They may bring some convenience for smaller, mobile merchants, and may justify its media hype and valuation on this basis alone.  However, it does not reduce merchant fees or improve security and is therefore unlikely to make a bigger dent in the card industry.

Location-based Services: Relegating Traditional Payments Providers to Commodity Players

As smartphones become smarter, location-based services and marketing is set to become the next big thing.  This is developing industry, with countless entrants.  Still, Foursquare, Gowalla, Facebook and Google appear to be the early leaders. 

Google is currently testing its Hotpot service in Portland (http://mashable.com/2010/12/09/google-hotpot-ads/).  Through this technology, customers will be able to receive marketing material and offers from the merchant as well as read reviews.

These marketing messages could be an opportunity for Google to leverage its Checkout service to disintermediate payments companies in the ‘bricks & mortar’ world.  One could also see Paypal entering this area by striking up a partnership any of the other players. 

Furthermore, we already see location-based services entering the rewards space.  Foursquare recently launched a partnership with Safeway and PepsiCo.  These partnerships will give brands access to check-in data on Foursquare and can push relevant offers based on your actions.  For example, a check-in at a gym could trigger PepsiCo to offer the customer an energy drink.

Location based services clearly demonstrate how mobile payments pose a threat to traditional payments companies and could potentially have them relegated to commodity status. 

Payments Frontier: Our Constitution

Payments Frontier will focus on three developments that are set to turn the payments industry on its head:

• Online and mobile payments are turning the industry on its head.  Since the launch of the payments card over 50 years ago, the industry has developed within the same infrastructure and there have been no fundamental changes.  In the last few years, several existing players, such as Visa, PayPal and IP Commerce, are opening the platforms up to external developers.  This should lead to a wave of customer-focused innovations that will fundamentally change the industry
• Billions of people who have previously been unbanked are being included in the financial services industry through prepaid and mobile solutions.   Migrant workers is a particularly interesting segment, as many of these currently deal in cash and repatriate enormous sums to their home countries.  A number of exciting initiatives are currently underway to convert this to more secure and efficient payments systems.  This is also likely to be an arena for innovation, as there are no legacy systems
• The social web is changing the way in which we communicate and could have enormous implications for how payments providers interact with their customers

Viva la Revolution !!  lets start the discussion ...