Category Archives: Mobile payments

Note of Retail Week conference – Innovation in Payments

I chaired Retail Week’s Innovation in Payments Conference on 15 September in London.

Here’s my presentation followed by the notes I took of the rest of the event.

UK market facts (Payment Council)

  • 30bn “spontaneous” payments made by individuals every year
  • 49% of these are cash, ten years ago this was 70%

In one month, the average UK consumer makes:

  • 27 cash payments
  • 16 debit card
  • 6 direct debit
  • 4 credit card
  • 2 contactless
  • 1 Faster Payment
  • 5% of consumers rarely pay with cash at all. This number is growing.
  • 4% of consumers rely exclusively on cash. This number is not falling. These people tend to be older and find that using cash allows them to budget effectively.
  • 94% of adults have a debit card. 60% have a credit card.

Contactless payments are growing strongly and will account for 30% of all consumer payments by 2025. Today, contactless payments are mainly in grocery (37%), restaurant/takeaway (16%) and transport (10%.) Contactless usage is higher among ABC1s and younger people.

There are 11bn cash payments which could be replaced with contactless. These are in grocery (21%), confectionary/tobacco/news (14%) and restaurant/takeaway (13%).

Consumers are keen on remote banking. Only 25% are exclusively branch banked. However, just 33% use their bank’s mobile app. This will restrict the utility of “push” payments from bank apps such as Pay By Bank App (PBBA).


UK retail should benefit from £700m reduction in Interchange payments. This is equivalent to just 0.14% of retail sales so there’re really no way of telling if/when it is passed on to consumers.

Android Pay

Now live in the UK, Android Pay has signed a number of card issuers including most of the large banks. A big marketing push is planned for September.

The user experience for POS not quite as elegant as Apple Pay. For example, for a combined payment and loyalty transaction, shoppers need to make two taps of the phone. In-app seems better designed and Google are quoting some nice KPI’s from early customers in the US. One shopping app is receiving 20% of transactions by Android Pay with a doubled conversion rate.

Apple Pay is notoriously hard to speak to. One very large retailer told me that her organisation was offered one 20 minute slot – take it or leave it – with no refreshments provided. Apple Pay won’t even speak at industry conferences so Google will surely pick up some business for Android Pay just by being human. Google’s business model remains advertising based and it doesn’t charge retailers or issuers for Android Pay transactions.

Hillarys Blinds

Good case study from Hillarys which dominates the UK window covering market. Hillarys has over 1,000 agents out in the field measuring windows and providing instant quotes. Obviously, it makes sense for Hillary’s to try and take the money there and then rather than sending an invoice.

It wrote some bespoke software in 2005 for its agents to use to take customers’ card details on via their Hillary-issued mobile phones but this was not really compatible with updated PCI regulations. Instead, it wanted to use an mPOS device. The challenge was that 20% of UK homes do not have a mobile signal so Hillarys needed a device that could take transactions when offline. Adyen has done this with a solution from the airline industry linked to a Verifone E355. £20m of payments annually is going through these devices and customers very much like the idea of paying with chip & PIN in their own homes. Transactions are tokenised so that Hillarys can take balance and staged payments.

Harris & Hoole

This 42 shop chain of specialised coffee shops was owned by Tesco but has recently been sold to Caffe Nero. Harris & Hoole is now on the fourth version of its successful mobile app and can arguably claim to have the most effective on the market. The key components are loyalty, drink preference, payments and deep ePOS integration.

The payment wallet is pre-pay because pay per transaction card processing fees for very small amounts has been uneconomic. This has changed following the Interchange caps and post-pay would now be a viable option.

The app geolocates the customer within the store and prompts the customer to check-in. At this point, the customer’s name/photo/regular drink are passed to the ePOS so the server can say “the regular, Geoff?” If the customer says yes, a push of a button on the ePOS sends the drinks order to a screen above the barrista. If the app is set up for payments, then the stored value account is debited. If not, the server asks for cash/card payment in the normal way.

There is no way of telling for certain the business benefit of the app as H&H don’t know the behaviour of app users before they began using the app. However, H&H did reveal:

  • Orders from the app are processed 20% faster than others
  • 20%-25% of all orders involve the app. At Tooley Street, 46% of all orders are driven by the app including 15% of payments.
  • In 98% of stores >10% of orders come from the app
  • In 25% of stores >20% of orders come from the app
  • The app grew from 6% of orders to 18% when H&H retired the previous paper-based loyalty stamp card. This was a bold move but a successful one.
  • Where Apple Pay is offered to a shopper, it is used in 85% of cases
  • Support has been a headache, especially for Android as there are so many versions


This is a fast growing chain of Thai-inspired casual dining establishments that does a big lunchtime and post-work trade in central London. Table turnover is fast and many parties want to split the bill.

Busaba launched a pay at table app which allows easy bill splitting but also includes its “39 steps to enlightenment” loyalty programme. The app is based on MyCheck. In 2016, 83,000 transactions were made with the app to a value of £2.9m at an ATV of £38. So far this year 70,000 transactions have yielded £2.3 revenue with an ATV of £44.

The app has been downloaded 170K times (75% iOS) with 147K registered users and 100K regular users across 17 restaurants. Apple Pay usage is growing fast and doubled in the last quarter. As well as turning tables quicker, the app gives RFM and other useful CRM data.

The next phase is to add extra features to the app including e-gifting and order at table. The latter is expected to result in additional sales of drinks.


The big trend in grocery is more customers buying more often but buying less. 40% of people don’t know at 4pm what they will be having for dinner. Waitrose customers are increasingly polarised between “fast lane” and “slow lane” behaviour. Its payment strategy focuses on security, choice and ease and is based on a fully tokenised managed PED service from Verifone.

In the “fast lane,” Waitrose introduced QuickCheck, hand-held devices which can be used to scan merchandise before it’s put in the trolley. At the end of the shop, customers go to one of the self-checkout machines, scan a barcode and pay with their card. This has been around for twelve years and have some devoted followers. QuickCheck is being upgraded with new handsets and an alternative in which the shopper can download a QuickCheck app and use their own phone to scan the products.

Click on the image for an explanatory video
Click on the image for an explanatory video

The service is only available to MyWaitrose loyalty members. This ensure that Waitrose knows where you are in-store and can send you relevant communications for the department in which you are shopping. Scanning is the spine around which everything else is built. People still have to use the self-checkout machine at the end because there may be age-restricted items in the basket.

Self-scanning has been quite slow to take off. The move to shoppers bringing their own bags should help – the old bagging process is a major disincentive to self-scan – but Waitrose is also trying to overcome customers’ concerns about not wanting to look like a shoplifter.

Waitrose installed “skinny” self-checkout machines in one London store – no scales, no cash drawer – and improved customer satisfaction from 56% to 72% in a week. Queues fell and the store is doing 2000 extra transactions/week at £12 ATV.

Across its estate, 35% of all transactions are now contactless. This is six seconds faster than chip & PIN. Waitrose has one cash-free store. This is on the Sky TV campus but is a special design due to space limitations. There are no plans for any other cash-free outlets.

Waitrose is piloting the VF355 for queue busting and fulfilling non-standard orders eg picking up a turkey at Christmas. Waitrose is very happy with Verifone as a strategic partner.


London based healthy eating salad bar with 27 stores and ambitious plans.  Its USP is that you order a bespoke salad that is made in front of you. This is a great strength but also a major weakness because choice and customisation slow down operations. These have gone through four iterations.

  1. Order at the salad bar, pay at till – this was very slow and distracted the “tossers” from tossing.
  2. Order at the till and take a ticket to the salad bar – an improvement but was still too slow and resulted in a “mosh pit” of customers milling around the store
  3. Mobile app on which customers could pre-order for collection – nice idea but didn’t fit into how customers really have decide what to eat for lunch.
  4. Replace some tills with kiosks – nobody used the kiosks
  5. Replace all the tills with kiosks and forced the shift to self-service

In a typical store, six manned till points have been replaced with 17 tablet/kiosks, each with a Verifone payment terminal attached. Tossed spent a lot of time on getting the UI right having piloted in their head office canteen. Point One (the ePOS vendor) worked on the project.

The move to kiosk has taken cash out of the organisation completely. Nobody has complained. It has also increased the amount of customisation that consumers ask for which has put some pressure on production. Staff have been reassigned from the tills to production so net labour cost is the same.

This was a theme from the previous day’s Finance Director conference. A combination of Brexit and increases in the minimum wage means that retailers will need to ensure that scarce human resource is directed at things customers care about. In the Tossed example, staff are better employed making the product than with ordering/paymentt.


This is a well-funded mobile wallet that spun out of Imperial College Labs. It began with close loop applications and is present in 35 universities and 66 office restaurant locations. It reckons that 13% of the available spend is made through YoYo today.

Longer term, it wants to enter the High Street – it has signed Planet Organic – and use its consumer insight to combine loyalty, offers and e-receipts.

When a customer want to pay by YoYo, the sales associate hits the YoYo tender type button on the ePOS. The customer opens his phone, opens the app which produces a bar code. This is scanned by a scanner attached to a special YoYo box attached to the ePOS. Merchants are settled by YoYo directly and independently of their merchant acquiring relationship.


DigiSEq is a platform allowing the credentials of any contactless bank card to be provisioned to any piece of wearable technology. It’s a great concept although there are plenty of challenges. I blogged about DigiSeq here.


WoraPay has similar functionality to YoYo but doesn’t want to build its own brand. Instead, WoraPay offers white label payment/loyalty apps to retailers. It is has been picked up by the Lloyds Bank ventures team and is live at the Lloyds Bank staff canteens in which 10.200 man years are lost each year in queues.

At Lloyds, 1 in 3 lunch orders are now paid for by WoraPay. The app works very differently to YoYo. Customers order and pay for their food in advance via the app which gives them a virtual ticket to use when collecting their lunch.

Lloyds Cardnet are now selling WoraPay.

Universal Basket

This is an app that allows you to put any product from any retailer into a single shopping basket and to buy the basket with one payment. Universal Basket stores your details and automatically creates account and fills out the forms on multiple checkout pages behind the scenes.


The app works via screen scraping which means that there are some obvious PCI challenges. UB says it’s managed to meet overcome these and is now in Beta. There are some customer experience ones too – notably that you’ll get asked for your CVV code because UB isn’t allowed to store this. So, you could get multiple 3DS challenges which won’t be a great customer experience. But it’s a neat concept nonetheless and I’ll be keen to see how far Universal Basket gets.


mPOS World – Vendor Commentary and other Notes

My notes from the mPOS World conference in Frankfurt, July 2015.

Tablet EPOS Vendors

I Love Velvet – French start-up that hitherto focused mainly on the US market but is now looking for customers in Europe. It has designed a wonderfully Gallic set of peripherals that are reminiscent of a 1980s Citroen. Target market is large retailers.

I Love Velvet iPad stand
I Love Velvet iPad stand

Shopkeep. This is a very fast growing US based tablet EPOS vendor focused on small retailers which already claims 16K customers including 50 in the UK. Jason Richardson, its CEO, was good value. “There are thousands of different payment devices but they all do the same thing,” he said. “There are hundreds of payment gateways and they all do the same thing too. They just compete on price.”
To win his attention, vendors will need to underline their service credentials. Shopkeep wins business because of its reliable telephone support and PSP’s will need to make this easier, not harder, to manage.

Jason was negative on app stores linked to payment or EPOS services as he didn’t think volumes were yet sufficient to attract good quality third party developers. He was also negative on anything that adds complexity to the point of sale as it slows down the checkout process. “People are flumoxed by new form factors,” he said, refering to some of the cool new payment terminal concepts. Keep it simple.

Touch Bistro. Like Shopkeep, Touch Bistro is a fast growing iPad EPOS app but, as its name suggests, it’s focused on the hospitality trade. Alex Barrotti, the CEO, claims to be the #1 food and beverage app on the Apple Appstore and his software is now powering 3.000 venues, mainly in North America. Most are small but there is one with 65 iPads running simultaneously.

Touch Bistro sells on its ease of use (80% of installations are done online) and significant price differential with a conventional Windows based Micros-style set-up. The iOS apps are also more attractive to the younger demographic of waiting staff and require less user training. Integrations, to reservation services such as Open Table, or to food delivery providers, hitherto provided at the whim of large software vendors become straightforward. Inputing an order directly to the kitchen from the waiter’s device at table saves 7 minutes per party.

New restaurants are an easy sell. Switchers, especially large venues, are harder to convince.

Touch Bistro only uses Apple devices as there are so few that the support staff can know them in detail. With Android, you never know quite what you’re getting, it appears, and that makes for a diminished customer experience. iZettle had a similar complaint. Its free card reader uses the headphone jack to communicate with the merchant’s smartphone but “it’s a nightmare dealing with 100 Android handsets, each with a different configuration.”

Order Bird. Another German iPad EPOS for the catering market, Order Bird services 4.000 venues with an average of 1.6 iPads/restaurant and claims 10% of the market for new installations in Germany/Switzerland/Austria. Order Bird sell on their customer service and employ only ex-restaurant staff on their helpdesk. mPOS has been helpful more because of its scalability in a seasonal business than because of its price. Concardis, a German acquirer/PSP, has taken invested €6m for a stake in Order Bird, and has launched a combined proposition that includes a merchant account with a lean onboarding process and a jointly branded mPOS device. This being Germany, 70% of transactions processed are still cash, of course.

Concardis/Orderbird mPOS device
Concardis/Orderbird mPOS device

Nobly, a London based tablet EPOS vendor targeting quick service restaurants and cafes with turnover around €1000/day. It claims activities in 40 countries and offers a standard Ingenico card machine, the PayLeven and iZettle mPOS services. Nobly has taken the brave decision to supply its software only on PowaPOS hardware.

mPOS service providers

SumUp – claims to have been the first European mPOS player and is now present in 13 countries and differentiates by keeping the whole value chain in house – hardware, PSP and regulatory licenses. This allows it to make a profit on the sale of card readers while its competitors lose money on reselling them. It also makes entering new markets easier.

SumUp began with a direct sales force but now finds most new customers sign up online. It has signed distribution agreements with banks in Spain, Switzerland and Germany. Banks have struggled to sell mPOS but micro-merchants are a segment for which banks have little new product so should use mPOS as a footfall driver to get new customers into the branches.

SumUp claims 300K customers but won’t disclose any other details. Its CEO says most customers are small as its proposition (card reader + card processing) is cheaper than a bank terminal for any business taking < €5k per annum. Half of its customers are new to cards; half switch from a bank terminal.

Larger merchants are now showing an interest based not on price but on the elegant form factor and enhanced reporting capabilities. These need to be dealt with via the EPOS partners as they have complex requirements SumUp has no interest in developing EPOS features, this is done well by the specialists and it will stick to doing the payment part really well.

GoSwiff – Singapore based with distribution via banks and mobile operators in the Middle East, South East Asis and Latin America. There is a large acceptance gap in these markets – there are a great many cards issued but relatively few places to use them – which means merchants are keen to buy. In contrast to Europe, banks have the credibility to sell the product.

iZettle – growing swiftly thanks to (1) a free card reader and (2) high spending on advertising, iZettle (like its competitors) didn’t give sales figures but did introduce a new concept in segmentation. It has redefined micro-merchants as nano-merchants and created a new micro-merchant definition of €5K-€50K turnover, the upper part of of which would normally be recognised as an SME by a UK mechant acquirer.

The implication of the new segmentation is that iZettle needs partners to sell into micro-merchants and these will be the tablet EPOS vendors. One interesting point. iZettle has hired ten analysts from Klarna who have developed the automated decision on whether to accept a new merchant. 85%-90% of customers are accepted with no human intervention.

Respect to PayLeven for bring a customer along. Sabine Seitz, who runs an art gallery in Frankfurt called Fotographie Forum, explained that wanted to replace the cash register but didn’t want Windows as Microsoft wasn’t cool enough for a art venue. She came across Inventorum, a German EPOS start-up, who convinced her that an iPad based option was least risk. After all, if you don’t like the software, you can always find something useful to do with a spare iPad. Inventorum comes with PayLeven as standard. Sabine was very happy with the payment service too but this underlines my earlier point that PSP’s need to embed themselves with the EPOS vendors and not the other way around.

Adyen – mainly known for its e-commerce payment gateway, also commercialises an mPOS device but sells based on its ability to link up sales from all channels through a single payment gateway aimed at larger retailers. The key advantge of this approach as highlighted at the mPOS conference is the ability to tokenise cardholder details in one channel and take actions based upon this token in another.

This can allow a retailer to offer much improved customer service but the use cases are rather too specialised to make a large market. For example, Miliboo, a French furniture retailer, uses the service to take an authorisation when people want to buy in the shop but uses the token to put the transaction through only when the goods are shipped.

Market specific commenatry

Spain – Verliana Ivanova from ITOS Technologies explained how the Spanish mPOS market had evolved. All major banks and the two largest PSPs have launched products based on a common template provided by ITOS using Datecs devices. BBVA and Santander went further and invested in SumUp and iZettle respectively although the involvement seems to be purely financial so far.

None of the propositions have been successful. According to Verliana, less than 500 units have been sold to micro-merchants in Spain. Banks now believe that mPOS is wasted on micro-merchants and that a more rewarding strategy will be to target large retailers and businesses with large, mobile fieldforces.

Italy – the numbers looked positive for mPOS in Italy. Only 15% of SME’s take money on cards yet card payments are growing at 4% pa. Even better, a new law required retailers to offer the option of electronic payment for transactions >€30 sparked the launch of no fewer than 83 mPOS services in the Italian market.

Andrea Nardi from Telecom Italia Mobile (TIM) spoke about his launch of a white labeled mPOS service from PayLeven. TIM’s proposition looks interesting – free device + 1.95% for all transactions bundled with a €10/month SIM. Like many other providers across Europe, TIM has found that reality hasn’t met the hype and less than 1.000 units have been sold.

Telcom Italia mPOS proposition
Telcom Italia mPOS proposition

Italians have preferred to keep using cash and the Government has not backed up its law with any sanctions for non-compliance. And TIM has discovered that it takes a few conversations to explain card payments to a merchant new to the subject. Sales have been disappointing and TIM is working with Olivetti (owned by Telecom Italia) to integrate the mPOS service with Olivetti’s EPOS. This would produce an Italian SmartPOS bundle that sells, I assume, through Olivetti’s normal channels.

Field Force

The second new opportunity for mPOS lies with large enterprise field forces. Self employed tradespeople haven’t taken to mPOS but employers of large mobile workforces understand the value of taking money on the move. A good example cited was the UK TV Licence enforcement whose representatives have an mPOS device. Field forces may struggle to use consumer orientated smartphones and tablets to generate and track tasks and payments.

Instead, a new range of ruggedised handhelds running Android and linking to mPOS devices will develop. GMX YouTransactor has some interesting ones aimed at 15m potential users worldwide. Its CEO suggested that the largest opportunities are in logistics, utilities, lottery agents and onboard selling on planes and trains. These devices are designed to be integrator and VAR friendly.

Micro or nano-mechant opportunities

Meanwhile, the interesting micro-merchant opportunities are in emerging markets such as Brazil rather than mature European ones. The focus is on small, robust and cheap devices that are typically the merchant’s first electronic payment device and have been helped by public policy initiatives to reduce cash usage. iZettle has shown some courage in moving to offer a free device albeit one that connects in the old fashioned way through the headphone jack. This is a good way of gaining a great many customers quickly but risks attracting the wrong kind of customer – infrequent, low users.

Some case studies from MasterCard highlighted some nano-merchant success stories:

  • A Stockholm food truck cut staff from three to two but introducing mPOS. In Sweden, you’re not allowed to handle both cash and food for hygeine reasons so the move to 100% electronic money cuts operational costs. This use case might struggle in the UK where food truck chefs typically wear blue latex gloves which prevent them operating a smartphone or tablet while cooking.
  • A beautician in South Africa who travels to peoples’ home to cut hair, cut debts from 10% to 0% by using mPOS to offer card payments to people who hadn’t enough cash to pay the bill.
  • A pharmacist in India used mPOS to take payment on delivery via card from elderly patients who don’t get out much and are often short of cash. His customers now have the means to buy a wider range of items and his sales are up 14%.

There was some anecdotal evidence presented that distribution costs fall as communities of smaller merchants are seeded with the product. Shopkeep mentioned this.

Other questions

Security – mentioned by very few participants although one said that fraud on mPOS devices was still very low because “organised crime hasn’t got round to it yet.”

Contactless – the card schemes laudable drive to increase usage of contactless has slowed the mPOS market. In Europe all new payment terminals must be shipped with contactless capability from January 2016 but adding this feature increases costs and puts extra strain on the sometimes under-powered batteries. Consquently, fewer new products being launched in recent months as manufacturers focus on the challenge ahead. The insistence on contactless has baffled some in the mPOS industry as the devices are unsuited for high volume retail usage where contactless is demanded by shoppers.

Equally annoying (and costly) is the continuing requirement to include a magnetic strip reader. With the Americans belatedly moving to chip and PIN in 2015, these will be needed for a few years yet, it seems.

Are traditional payment terminals dead? The consensus at the conference was that mPOS and standard desktop machines will coexist. I think this is only partially true. Many retailers will still prefer a chunky card machine sitting on the counter but that’s not to say that they will keep faith with an old fashioned Ingenic/Verifone machine. A new wave of terminals is arriving which capture the spirit and innovation of mPOS but in a more usable format for retail. Poynt is a good example; so is Clover from First Data and Albert from Wincor Nixdorf.

Mobeewave – defying classification, this Canadian start-up has found a way of turning a smartphone into a contactless card reader. The conference pitch didn’t do the idea justice and its CEO was rather battered by his fellow panellists who focused on obstacles (there are many) rather than the opportunities. By entirely removing the need for a card reader, Mobeewave could reduce the cost of card acceptance still further but there’s a way to go to convince a sceptical industry audience.

MasterCard index

MasterCard’s new mPOS index showed 78m transactions globally in the first five months of 2015 with an average transaction value (ATV) of $50 and a highest transaction of $129K. The index is brand new so doesn’t yet show clear trends and only covers transactions processed centrally by MasterCard. Nevertheless, it will become a welcome source of facts in an industry characterised by andecdotes.

According to MasterCard, the top merchant categories globally for mPOS are barber/beauty, office supplies, restaurants, fast food and bars, dentists/doctors/pharmacists and insurance sales. Top markets are US, Australia, Canada, Sweden and Brazil but ATVs are highest in Middle East and Asia Pacific.

Apple Pay not yet ripe

Last week’s announcement of Apple Pay’s UK launch brought that day a step closer.

This isn’t the first mobile payment product, so why the fuss? Partly because it’s from Apple, of course, but mainly because Apple Pay, unlike some previous attempts, actually works.

Take an iPhone 6, press your thumb to the screen, tap it against the shop’s contactless payment terminal and you’re done.

No need to unlock the phone. No need to input a passcode. No QR code. No question, it’s going to be a great user experience.

But don’t expect too much too quickly.

Most British shoppers don’t have the right device. Apple Pay only works with the iPhone 6, which accounts for just 20% of new phones sold in the UK and, of course, a much smaller proportion of the phones currently in people’s hands.

Barclays, the nation’s biggest card issuer, hasn’t agreed to participate yet, so even some iPhone 6 owners won’t be able to use Apple Pay.

As importantly, the payment industry has got itself into a pickle around how contactless transactions are processed. This risks making the experience at point of sale unnecessarily confusing for staff and shoppers and reducing uptake.

Contactless transactions are currently limited to £20. This will rise to £30 in September. For the higher amounts, the payment terminals will need to go online to get the transaction authorised.

If it’s a broadband terminal this will add a slight delay, or if it’s one of the 250,000 dial-up card machines still active in the UK, a rather longer one. Less tap and go –  more tap and pause and go.

Apple Pay isn’t restricted to £30. There is already provision for ‘high value’ contactless transactions to be processed, provided they are validated by a security protocol from the cardholder’s phone.

However, last week’s Apple Pay publicity revealed that some payment service providers hadn’t yet made the necessary technical modifications to their systems.

Retailers would be well advised to suggest their suppliers get moving, and to train their staff that contactless behaves differently according to the transaction value.

There’s one more wrinkle that retailers need to know about. Apple Pay dynamically generates a new card number for each transaction.

This means that any service that uses card numbers to track shopper behaviour to provide CRM or loyalty/rewards is going to struggle. Card-linked offers may become a thing of the past.

Although there will be teething troubles, Apple Pay has legitimised mobile payments in the eyes of mainstream commentators and the general public.

It will spark a wave of innovation and will make life easier for those that follow, such as Samsung Pay or Zapp.

Initially, Apple Pay will work well in high volume/ low ticket value applications such as rapid transit or sandwich shops in which there is already a high propensity for contactless payments.

Elsewhere, retailers that have not yet upgraded to contactless payment terminals will need to make a judgement, based on their customer profile, about when or whether they will lose sales if they can’t accept Apple Pay.

Longer-term, service-led retailers should look to phase out card machines and move the transaction to an app sitting on the shopper’s device, for which Apple Pay also offers a very neat payment mechanism.

And it is here that the real payment revolution will begin.

This post originally appeared in Retail Week (£).

REVIEW: Mobile payments reach escape Velocity

The mobile payment revolution begins with restaurants. Diners love the freedom to pay and leave when they are ready without all the back and forth of paper bills and card machines. The restaurants can turn the tables quicker and, for the first time, build data-heavy profiles of their customers. And most importantly,  the staff love the higher tips that diners leave when they pay digitally.

Restaurant brands need to decide whether they want to build their own payment app or partner with one of the growing number of third party ones that hope to offer diners the ability to pay in many different establishments. Of course, restaurants could do both. It really depends on their brand, the frequency of visits and their approach to owning customer data.

The latest app to launch in the London restaurant scene is Velocity. I met Zia Yusuf, the CEO, this week and then tried out the app at Aubaine, just off Regent Street. I was really impressed. Apart from a couple of typos, it was a very smooth experience and will be a formidable competitor.

Here’s out it works.

Velocity home screen
Velocity home screen

First, you download the app. Graphics are lovely and the whole experience is heavy on the aspirational branding. There are plenty of glossy photos of impossibly beautiful people drinking cocktails but the designers haven’t been afraid of black space either.

Critically, Velocity offers registration by Facebook. Zia told me that over two thirds of users opt for this. With one touch, Velocity has your name and email address plus all the demographic information they could ever need. There is a link to T’s and C’s and a privacy policy but I’m guessing very few people click the link.

One of the challenges ahead will be to negotiate the minefield of what information can be shared with the restaurants. The subject of who owns or has access to the customer data is always a lively discussion.


Velocity picks up your photo from Facebook – another reason to make sure it’s an appropriate one – and also prompts for your phone number. The registration steps are well signposted.


Velocity asks to use your location information….


… then suggests where you might be. In this case, there are two restaurants next to each other. I was in the second one, Aubaine.



Next, you save a payment method. You can load multiple cards, including American Express, and the app offers a neat option of splitting between business and personal. Velocity is anticipating a lot of usage from expense account diners.


Velocity prompts you to take a photo of the card but you still have to complete the expiry data, CVV and your post code.

velocity amex

Now you’re registered. Cue a welcome email featuring some more of those beautiful people.


Next you need to tell the waiter that you want to pay with Velocity.


The waiter asks your name and then goes to the EPOS terminal where he’ll  see a list of Velocity customers in the queue to be checked in. If the EPOS supports it and if you have registered by Facebook, your photo will appear on the EPOS which should make for easier identification.

This a quite a manual process involving a conversation between the you and waiter. My waiter at Aubaine said that a Velocity rep came in regularly to keep awareness among the staff high but it would have been good to see some Velocity branding on the tables too. Zia told me that they have this at some other clients.

If it works smoothly, the conversational approach to matching the diner with the check should be elegant and seamless for the customer and will suit some restaurants very well. But a very busy establishment in which staff are greeting and taking orders from multiple parties might prefer an app that generated a code or that required the diner to input his table number into his phone in some way.

Most restaurant apps ask you to press a “check out” button when you want to leave. At this point, the app pulls the check from the EPOS system. Velocity is different and pulls information from the EPOS every few seconds meaning that your check is always accurate and available in the app.

It was mid-morning so I ordered a cup of tea.


Recognising the abundance of food porn infesting the Internet, Velocity helpfully provide a camera button so that you can photograph your meal. Most people won’t get to this screen until they’ve finished so there’s a risk of a few shots of empty plates.  If you wish, Velocity sends the photo into Instagram with the restaurant’s #tag included for your convenience.  Here’s my cup of tea with the contrast cranked up and the Valencia filter applied.


This feature will be very attractive to the restaurant marketing teams who are very keen to encourage social sharing.

After you hit the pay button, you get the chance to split the bill with friends. You can divide the bill equally or split according to a percentage. Sensibly, you don’t have the option to pick and choose which items you ate. That way lies madness.


Next, tipping. Aubaine include service in the bill so Velocity sets the tip at zero but you can add extra if you wish.


The app presents the payment cards you have pre-loaded and you choose the one you want to use. Velocity doesn’t ask for the CVV code. This makes for a better user experience and means that you could genuinely leave your card at home. On the other hand, transaction processing costs will be higher and there will inevitably be a greater risk of fraud.

Velocity uses the Judo Pay gateway which forwards transactions to the restaurant’s acquirer of choice.



After payment, Velocity allocates you some points. I only earned three for my cup of tea which puts me a long way short of the 5000 I need to redeem a prize. It’s a personal view, but I think the “payment accepted” text should be larger and more central. People won’t want to leave the restaurant until they’re absolutely sure they’ve paid.


The app then asks for a rating and offers the opportunity to leave a comment for the restaurant manager. I’m not sure what “null” is about. I expect it’s a blank field where “Aubaine” should be.

Zia told me that participation rates were high for these features and that they were highly valued by the restaurants.

Finally, you can order an Uber or share your staus via one of a number of social networks. A neat touch is that you can see straight away how long you’ll need to wait for a cab.

Less neat is the thank you from Nozomi, a Chelsea sushi place noted for its monochrome dining room. I’d not eaten at Nozomi. I’d been a customer of Aubaine.


Receipts are nicely stored with clear summaries and the ability to drill down if needed.



You get an email receipt as well. This includes a short motivational message.


Another nice feature is  the FAQ section.


Velocity wants to be more than just a payment app. It includes a discovery tab with glossy photos of other local restaurants that accept Velocity.


The plan is to be able to book a table directly from the app but you’ll have to content yourself with a phone booking right now.


Restaurant payment apps are hot at the moment and there are more competitors in this space than there is room for in your smartphone. Many will fail but, of those I’ve seen so far, Velocity stands a better than average chance of success. The design is good, the experience elegant and the management understand the importance of delighting both restaurant and diner.

Review: Mastercard launches mobile payment app at Wagamama.

For an app that has been three years in the development with Mastercard’s money behind it, Qkr! is rather underwhelming:

  • It hasn’t been customised for the UK market
  • The user experience is not intuitive
  • The payment mechanism (generating a code that the retailer punches manually into the till system) seems unnecessarily clumsy
  • I’m not enthusiastic about its security being a password, rather than a passcode or fingerprint
  • The brand name is a random selection of consonants which people will find rather hard to remember
  • There’s confusion between Masterpass and Qkr! branding throughout

See what you think.

I love Wagamama. Its blend of ramen style asian fusion, quick service and friendly staff makes it a great place for a fast, healthy meal. So when I read that Wagamama was now accepting a new mobile payment app from Mastercard called Qkr! I knew what I was having for lunch.

Casual dining chains typically report an average checkout time of nine minutes or more. Mobile payments apps should be able to speed this up significantly, resulting in happier customers and faster turning tables. Finish your food. Tap your phone. Leave. What could be better? Here’s how Qkr! works at Wagamama.

First, visit the app store. No problems there. Its easily found provided you can remember its Qkr! rather than kQr!, Qrk! or some other random selection of consonants. The branding, complete with mini supermarket trolley, is more grocery than restaurant though. And prices are displayed in Euros which would make people think question whether they’d arrived at the correct app for the UK.

Qkr! in the Apple Appstore

The app asks whether it can send notifications and access your location even when it’s not open. Fair enough.

Qkr! permission screen

Qkr! then disappears. and MasterPass pops up to ask the next set of questions, including which country you live in. The app, which has just gained access to my location, should know this already.

Qkr! location prompt

Then there’s a fairly conventional sign up screen, asking for name, email and a password. The password is six characters with no restrictions. I would prefer a passcode as a set of numbers is much easier to input when the time comes to pay.

Qkr! log in details

Then some security questions. This is another example of non-customisation to local market requirements. We don’t have “third grade” in the UK.


Then a photo. Smile! The Qkr! brand reappears at the bottom of the screen but misspelled as QkR. It also loses the !  but gains a TM instead.


Next, add a payment card. Respect to Mastercard for letting me use my American Express card and I liked the cheeky touch of splashing some Mastercard colours on the top right hand corner.

Qkr! add card screen

Then an email arrives notifying me that the card has been added. That’s a good touch which reinforces the app’s security credentials but doesn’t mention Qkr! at all. Again, there’s the potential for customer confusion.

Qkr! confirmation email

So far, so good. I sped into town and ordered a Chicken Ramen at Wagamama on Wigmore Street, just behind Selfridges.

chicken ramen

When it came to pay, I wasn’t quite sure what to do. I’d assumed there would be a QR code on the bill. No, there  wasn’t. I went back into the app, rooted around and found a button that allowed me to “check in” to the restaurant. This really wasn’t a very obvious step but worked smoothly once I understood what was needed. The app then returned me a very large four digit number. The instructions were to give this code to the server. Note that there’s now no branding at all, neither MasterPass or Qkr!

Qkr! check-in screen

She wrote the number on her hand and strode across the restaurant to the till. The servers are equiped with mobile devices but evidently they’ve not been integrated with Qkr! yet.

The low-tech bit

The server went across the restaurant to punch the four digit number into the till. I noticed a button marked “leave” displayed in the top right. It wasn’t clear whether that meant leave the app or leave the restaurant but I hit it anyway. “Check out” or “Pay Bill” would be better terms to use. Or use the trolley icon throughout to signpost users to the checkout.

The server came back and together we waited about 30 seconds for the transaction to close and the bottom bar on the app to turn green. This indicates that you are ready to pay. You then press “Your Bill is Ready,” to generate the bill.

Qkr! ready to pay

To pay the bill you press the picture of a supermarket trolley on the next screen; not really the most appropriate icon picture for a restaurant.

Qkr! view bill

The app next prompts for a tip.

Qkr! gratuity prompt

Next comes the prompt for a Qkr! password.  Confusingly, the sign-on screen in which you initially create the password is branded MasterPass. Did I create a Qkr! password or a MasterPass one? It may not matter. In fact, the password is optional and you can disable the prompt from the setting menu.

Qkr! password prompt

Finally Qkr! generates a confirmation screen and emails you a copy of the receipt.

Qkr! thank you

Qkr! receipt

My server was well trained, helpful, interested and a credit to Wagamama. She was delighted when I explained that tips were generally higher when people paid with apps. It’s certainly in the staff’s interest to promote this new way of paying.

I was impressed that the Qkr! app worked first time. That‘s a non-trivial achievement for Mastercard and Wagamama and I wouldn’t want to minimise the effort that’s gone in to this implementation.

But better solutions are available. For example, Flypay is a mobile payment app designed for the restaurant trade which has a signficantly better user experience. Your checkout by simply scanning a QR code stuck to the table top. You can try using it at Wahaca. And Apple Pay’s in-app payment option (when it becomes available in Europe) will be streets ahead of where Qkr! is today. Zapp too, I would expect.

Wagamama is misssing an opportunity as well. Qkr! is a generic payment app that Mastercard would like many merchants to accept and I can see its relevance for shoppers who visit a particular brand only rarely. But Wagamama is a popular chain with a loyal and regular clientele which would be better served building its own user experience that offered multiple payment options such as Flypay, Apple Pay, Qkr! or even PayPay.

This is just what brands as diverse as Greggs and Starbucks are doing. With its own app, Wagamama would begin to build a database of its customers, when they come in and what they eat when they do. This is a potential marketing goldmine and it would be a shame to miss the opportunity.

Will Apple Pay kill Quidco?

Card-linked offers are a fast growing corner of the retail loyalty industry. These schemes, of which Quidco and Topcashback are the leaders, offer shoppers cash rebates for spend with participating merchants. The shopper registers for the scheme and their payment card number (PAN) is used to track each transaction. These schemes have been successful because:

  • Shoppers can use one card to access rewards from many retailers.
  • There is no need for vouchers or discount codes.
  • Retailers can participate without making an IT modifications
  • Retailers can generate immediate footfall by posting offers which the CLO schemes then communicate to their subscribers

There are also some drawbacks

  • CLO’s are manually intensive. Typically, once the scheme has signed up a new retail partner, it organises for a file of each day’s card transactions to be sent from the retailer’s merchant acquirer to a trusted third party. There is it scanned for participating cards and these transactions are sent to the CLO scheme. The scheme then works out which transactions qualify for cashback, sends a bill to the retailer for the cashback/scheme’s commission and credits the money to the shoppers account.
  • CLO’s can only be applied to the whole basket. The card payment transaction only carries the total value of the purchase. So, for a department store (say) there’s no way of telling whether the shopper bought cosmetics or a cricket bat. That makes CLO’s a very blunt instrument.
  • CLO’s are not real time. It takes 24 hours (at best) to process a transaction which means there’s no way of either confirming to the shopper that they have received a reward or of communicating to shop staff that this customer is entitled to special treatment. This makes the whole process impersonal for both the retailer and shopper and impedes brand building.
  • CLO’s are fundamentally insecure. They can only operate through one or more parties storing PAN’s. This is allowable under PCI rules provided they are stored with appropriate safeguards but carries significant risk. Fines and collateral damage in the event of a data breach are unpleasant. LoyaltyBuild, an Irish, provider was forced to suspend trading for four months following the theft of customer card details.

ApplePay launches today in the USA and in Europe in Q1 2015. Although Apple Pay allows shoppers to spend money on their habitual payment cards, it doesn’t use PAN’s.  This is bad news for the CLO industry.

In place of a PAN, a token is generated for each transaction. The token has the same architecture as a PAN. The first six numbers identify the bank that issued the card so that the transaction can be routed in the normal way. But the last ten digits change for each purchase. This means that CLO schemes won’t be able to use the PAN as a unique identifier with which to track their clients.

Quidco and friends won’t be out of business immediately. Not everyone has an iPhone (although Apple Pay won’t be the only payment method that uses the new tokenisation methods) and it’s plausible that CLO shoppers may ignore Apple Pay in order to keep the cashback flowing.

However, CLO schemes can’t rely on PAN’s in the medium term and would be well advised to invest some time in commercialising alternative ways of tracking where their members spend their money.