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Plastic may be next on the plate

A rise in 'skimming' scams could push restaurateurs to adopt pay-at-the-table gear.

July 07, 2007|From the Associated Press

It's become routine for customers to swipe their credit or debit cards at consoles in fast-food joints, gas stations and grocery stores. So why do we still hand over the plastic at sit-down restaurants?

Pay-at-the-table systems are popular in Europe and other parts of the world, but they haven't yet caught on in the U.S., largely because equipment makers have been unable to point to a reason restaurateurs should invest in the gear.

Manufacturers now see an opportunity. A rise in the number of "skimming" scams in which waiters use hand-held computers to steal customers' credit card information and sell it is creating a sense of urgency. So is a push by managers to speed the flow of diners during peak hours.

"Restaurants are the last holdout where you still give up your credit card. That's why we think this is the next logical step," said Paul Rasori, VeriFone Inc.'s vice president of marketing.

Verifone's system is about the size of a thick remote control and sports a square liquid-crystal-display screen and a numerical keypad. It accepts debit and credit cards and can automatically add a tip.

Once the customer swipes a card, the information is sent wirelessly to a computer in the restaurant. A tiny printer spits out a receipt.

The Blade, a competing system from rival Hypercom Corp., is a sleek hand-held unit. But it also sports a touch screen that can double as a menu and an optional reader that allows customers to wave their cards instead of swiping them.

Both companies are betting that restaurants will be more willing to buy the systems, which can cost several hundred dollars, as security threats increase.

Some studies suggest that as much as 70% of all cases of credit card skimming stem from restaurant scams. A 2005 report by Fair Isaac Corp. detailed how hand-held skimming devices could take seconds to transmit data wirelessly to a person intent on committing fraud and advised merchants to use table-side devices so cards are always in a customer's hand.

The pay-at-the-table manufacturers say there's another benefit: greater productivity.

"If we can tell them they can increase table turns on peak hours by 1% to 4%, what's that worth to businesses?" said Scott Goldthwaite, vice president of Hypercom's global business development.

But the potential market for the systems in North America -- estimated to be as large as $438 million -- has been slow to take off.

It's partly because manufacturers have not completely meshed their systems with cash registers and other hardware developed by restaurant management companies. But it's also because many manufacturers have to do a better job of selling the benefits, said George Peabody, director of emerging technologies advisory services at the Mercator Advisory Group.

"They've got to prove a real market need, and it's got to be really clear," Peabody said.

Neither Verifone nor Hypercom would reveal the price of the units, but both companies have launched tests in U.S. markets to gauge how the American diner reacts.

At Ray's Killer Creek, an upscale steakhouse in the north Atlanta suburb of Alpharetta, the VeriFone system didn't take long to catch on.

Jim Wahlstrom, the restaurant's operating partner, spent roughly 10 minutes on briefing his waiters about the technology.

"We're all used to grocery stores and ATM machines," Wahlstrom said. "We all operate with our credit cards and debit cards in our daily lives."

As the happy hour crowd filed into the restaurant on a recent weekday afternoon, they seemed unfazed by the new way to pay.

Wayne Smith and two friends had just scarfed down three steaks and were waiting for the $191 bill when his waiter plopped down the machine. He scanned his card, touched the square denoting a 20% tip and waited for his receipt.

"I feel a little like I'm at Wal-Mart," Smith said.

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