With numerous mobile checkout solutions in the space, restaurants need to determine whether or not the various offerings make sense for their consumer base before jumping on board.

Mobile applications such as Dash, TabbedOut and MyCheck are competing to sign on both restaurants and consumers, but restaurants are waiting for larger consumer bases and consumers want more available restaurants. This vicious cycle leaves the mobile checkout world struggling to catch on in the restaurant industry.

“The multi-merchant solutions that involve in-store payment of a tab require lots of technical integrations across a wide variety of merchants and they also require a solid number of enrolled consumers to make it relevant to the merchants,” said Rick Oglesby, senior analyst at Aite Group, Boston.

“This makes the multi-merchant solution quite a bit more difficult to get going and it creates a chicken-and-egg scenario,” he said. “It’s not interesting to merchants unless there are consumers using it, and it’s not interesting to consumers unless there are merchants accepting it.”

“For this reason, restaurants, cafes and bars need to choose solutions that add value to their current environment, dependent upon how they are set up. Solutions that can bundle in revenue driving opportunities such as Groupon, which helps merchants attract new customers can make sense today.”

Mobile checkout
One of the newer mobile checkout apps is called Dash. Dash is available for free in Apple’s App Store.

It lets consumers open a tab, split a bill, pay it and leave a tip from within the app. Dash has signed on 10 New York restaurants and bars, including Village Lantern, Bagatelle and Agave, and it plans to add 40 more to the app in the near future.

TabbedOut is a similar app that is available on both iOS and Android phones. It is based in Austin, TX and has already partnered with dozens of restaurants in the U.S.

Then there is MyCheck which is also available for iOS and Android phones and works with restaurants in the United States, Britain, Brazil and Israel.

Each of these offerings claims to make checking out easier for both the consumer and the restaurant or bar.

So many choices
With so many different options in the space, it becomes more important for restaurants to really determine what is in their best interest.

“While these apps do provide an increase in productivity for restaurants, there are generally a very limited number of consumers using them, so merchants need to review the solution in reference to the type of business they operate and make a determination as to how well it fits with their business,” Mr. Oglesby said. “If they feel it fits their business and will benefit them so much that they are willing to actively promote it within their stores, then it’s probably worth doing. If they aren’t willing to actively push consumers to start using these solutions, then they are not likely to see enough volume to make it worth their while.”

As these solutions struggle to sign more restaurants and attract more consumers, it is likely that the space will begin to shrink in the near future.

There may be some consolidation, but there also simply may be some companies that go out of business.

Mr. Oglesby does not think that the mobile checkout apps serve a valuable purpose yet.

“Ultimately these solutions require too much consumer preparation (for many of the solutions, consumers need to be signed up for the app before they come into the restaurant, and they need to check in to the restaurant and create the digital tab before they start ordering),” he said. “This involves too much change in current consumer behavior (we decide how to pay when we are leaving not when we are arriving) to gain mass adoption.

“I don’t foresee any of these solutions gaining significant consumer adoption until they solve for the customer who is halfway through their meal, sees a sign on the wall indicating that they can checkout by phone, and then signs up and checks out right then with minimal effort.”

At the end of the day, the app must provide a clear benefit for consumers for them to take the time and effort to download the app and register. Until these apps create a situation where consumers are dying to download it because they are invaluable, it just will not gain the traction it needs.

Scott Thaler, executive vice president of digital growth and innovation at Zimmerman Advertising, Fort Lauderdale, FL, advises businesses to consider three key areas before making a decision in terms of mobile checkout services.

First, determine what core functionality you need and what services you can actually use. Then look at the type of data security they offer to make sure your consumers’ personal information will be safe.

Lastly, consider your financial business model and the fees involved to see how it will affect your end numbers.

“Smaller options can be sustainable, but it really falls to the business owner to research and find the solution that best meets their needs and provides a technology that works with the rest of their operations – all the while mitigating risk,” Mr. Thaler said.

Bigger players
Ultimately, the bigger players will have to forward the mobile checkout service to make it truly stick.

Google Wallet and PayPal have begun making efforts in the restaurant space, and they will most likely have an easier time at transferring the traditional restaurant experience.

Not only do they have better reach and branding, but they can also offer quicker and easier checkouts since consumers are more likely to already have a Google Wallet or PayPal account.

“The ones to watch are the ones who already have contact with consumers and whom consumers trust with their credit card information,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston. “The small names create buzz but the big credit card companies, ISIS (the carriers) and others like Google Wallet and PayPal are all seeking to entrench themselves with a hardware-linked system that allows large restaurant chains and retailers to link up to their Point of Sale systems. Collecting money is one thing, but big companies must link the systems that control inventory and tie-in coupons, gift cards, loyalty point schemes, etc.

“[Smaller options] might have limited, localized success, but it is very hard to scale at a big enough level to make enough on the small percent the models depend on,” he said.

“Level-Up, for example. has been hard at it for many years and, while urban hipsters might buy their food truck burritos with this tool, it’s hard to see a major, national brand pick one of these smaller options when they can partner with a Google Wallet, for example, or even roll their own private label payment app (like Starbucks so-successfully has done).”

Taking it to the next level
Whether it is a smaller startup or big-name player, any mobile checkout service is going to have to build on the traditional restaurant checkout and improve the experience.

However the app works it should take less time than it takes for a waiter to drop off a bill, come back to get a card, and bring back the receipt.

Beyond that, the app can add loyalty features to engage consumers. For example, it can allow restaurants to push coupons to consumers for future visits.

It can also let consumers sign up for the restaurant’s mailing list or loyalty program or drive them to post about their dining experience on social networks.

Additionally, mobile checkout allows restaurants to learn more about their diners. Consumers are no longer anonymous, so restaurants can create stronger relationships and better understand their diners.

“Gathering information about consumer usage and being operationalized to react to it will make a retailer and restaurant better poised to capitalize in a competitive marketplace,” Zimmerman’s Mr. Thaler said. “Learning what consumers do, how they do it and when they are doing it are worth their weight in gold if a business is prepared to act on it.

“But, maximizing things like loyalty and learning should not come at the expense of the reason consumers are using a tool,” he said. “It is just as important to remove any unnecessary ‘friction’ that exists in the purchase path and that may get in the way of a quick and concise purchase process.

“Amazon’s ‘one click’ process to make a purchase is a perfect example. This is the objective, in the end, to make spending money as simple as possible.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York