Mobile Payments

Pay wIth SquareThe number one question we get asked by people is ‘does Tap2Order support mobile payments’? We don’t support the functionality, but it’s a conscious choice – we’ll try to explain why in this post to ensure everyone understands this position.

Mobile payments are likely to be the next great frontier in the mobile computing ecosystem. Well-funded industry players like Google and Square are actively rolling out and promoting their payment infrastructure. In Australia, Commonwealth Bank’s Kaching is retrofitting iPhones to interoperate with existing payment infrastructure, and of course it’s likely that Apple will enter this market at some point. If Tap2Order implemented mobile payments we’d end up in competition with these entrants, which will probably require a large investment in manpower to stay in the race.

Separately, the traditional in-store payment options are (slowly) improving. NFC credit card payments such as PayPass/PayWave are becoming more popular in many markets, and these cut down electronic payment times significantly. In the coffee industry, store credit remains a popular option. We expect the time & convenience benefits of offering mobile payment functionality will gradually decrease as the in-store options improve.

Lastly, mobile payments are a hard problem to solve. The service needs to:

  • store the payment details (securely), preferably not running foul of PCI-DSS
  • set up & maintain internal merchant accounts
  • calculate the correct price for all possible transactions
  • perform transactions and notify the merchant (securely)
  • calculate (and on-charge) per-transaction fees
  • settle the net funds into the merchant’s account, preferably daily
  • handle disputed transactions
  • issue statements for reconciliation

These tasks, while all achievable, require significant additional engineering time and incur administrative overhead — for most similar services this is recovered by a per-transaction fee (a margin over the top of the card fee), and in our experience the coffee industry is less enthusiastic about margin-eroding transaction fees. Also, the customer needs to trust the service enough to create an account and register payment details; this is a significant barrier for most people.

In summary, offering integrated payments in Tap2Order is an expensive feature which will result in higher charges to our customers, lower user participation, pitch us against the big movers in the payment industry, and offer fairly minor convenience benefits, so we can’t justify implementing this at the moment. However, we definitely won’t rule out adding it in the future, particularly as the mobile payments industry matures and reliable/low-cost third-party services become available.