How Mobile Payments Make Restaurants (and Their Servers) More Money
Restaurants and bars that support mobile payments earn more tips, accrue lower costs, and see measurable improvements to their bottom line
In the past decade, mobile payments have gone from a convenient option to a practical necessity for restaurants and bars. As more digital wallets connect debit accounts, credit cards, and third-party payment services via apps, consumers are growing accustomed to paying directly from their smartphones. But mobile payments don’t just benefit customers. When restaurants implement them correctly, they also improve staff efficiency and customer satisfaction while bringing in more revenue — including higher tips.
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Customers are embracing mobile payments
Mobile payments didn’t become ubiquitous overnight — the technology grew steadily over the past two decades. Rising smartphone use was a significant factor, as was widespread interest among Millennials and Generation Z. Despite these drivers, mobile payments were unevenly distributed, with high adoption rates in China, India, and the developing world, while Western nations favored card payments.
In 2020, COVID-19 changed the game. Digital transactions surged throughout the pandemic as customers sought out safer payment options. Mobile payments proved a popular and versatile alternative that supported digital wallet apps, smartphone proximity taps, and more. In May 2020, approximately 19% of customers used their mobile devices to complete an in-store purchase for the first time. By April 2021, another 37% were willing to use QR codes to pay in restaurants and bars. As pandemic fears eased, the convenience of these technologies remained and informed how consumers interact with all brands — especially when their table gets the bill.
At CityCheers, we specialize in helping restaurants do better business by using the devices that guests already carry with them wherever they go. The best part? Getting your business on the CityCheers app is free. Book a demo with us if you’re ready to learn more.
The Restaurant Owner's Guide to Improving Operations
Smartphones, loyal customers, and positive experiences
Mobile payments lend themselves to positive customer experiences. When a large party has to split the bill, contributing an amount from a smartphone is faster than waiting for the server to print and distribute individual receipts. When you’re in a hurry and can’t stay in line at Starbucks, you can preorder a drink and expect it to be ready when you arrive. And in both scenarios, smartphone apps can provide updates and notifications about your order.
To customers, these benefits are not individual perks — they are experiences that represent the overall brand. From that perspective, it’s unsurprising that the earliest mobile payment success stories came from restaurants that included digital wallets in their loyalty programs. First-party apps from Starbucks, Dunkin’ Donuts, and other chains now bundle payment options, reward points, and other conveniences in a single location, so customers get better service all in one place — leading to repeat visits and more word-of-mouth referrals.
How mobile payments drive higher profits for restaurants
When implemented correctly, mobile payments directly impact a restaurant’s bottom line by increasing revenue and reducing costs. Most notably, offering digital payment options tends to increase foot traffic — especially when customers pay from their phone without waiting for the bill or a card reader. These fast transactions increase table turnover, which means restaurants can seat more customers and reduce the likelihood of walk-outs.
Outside of these efficiencies, some payment service companies offer a lower rate for mobile transactions than credit and debit, reducing overall costs. Mobile payments are also more secure since customers must unlock their phones before paying. And now that such payments leverage multi-factor authorization and biometric data, these transactions reduce fraud that contributes to revenue loss.
There’s also the loyalty factor to consider. Smartphone apps can pair mobile transactions with loyalty programs, making managing features like reward points easier for customers. Promoting these features encourages patrons to visit again, and the typical returning customer spends 67% more than a first-time drop-in. Over time, these benefits can add up to produce a significant boost to any restaurant’s bottom line.
How accepting mobile payments leads to higher server tips
Of course, it’s not just owners who benefit from mobile payments. All digital transactions increase the volume of tips for servers — one study found that 73% of customers tip at least 11% more when paying digitally. What’s more, full-service restaurants saw a 25.3% tip increase in the wake of COVID-19 while quick-service tips grew by 16.7%.
An additional reason for these increases is a general rise in automated tipping recommendations, a standard feature for mobile payment services. Simple reminders significantly impact server income. And while it’s important to note that tipping recommendations should be implemented carefully, even customers who push back against automated gratuities tend to make an exception for restaurants and large meal orders.
Mobile payments in 2023 and beyond
Mobile payments may not seem necessary for your business, but we’re reaching the point where the option is difficult to ignore. Over two billion people used digital wallets in 2021, and that number continues to grow. As a result, restaurants risk missing out on sales from valuable target markets if they refuse to support their payment preferences.
The good news is it’s easier than ever to implement these features at your establishment. CityCheers ExpressCheck lets customers use payment information stored on the CityCheers app to pay for meals without receiving their check, giving them a positive impression of the experience and freeing up their table for other customers. CityCheers also offers full restaurant POS integration with many top providers so that the onboarding process will be fast and painless. Book a demo with us if you’re ready to learn more.