REPORT FROM THE U.S.—Forms of payment continue to evolve.
For everyday transactions, cash hasn’t been king for years. Debit and credit cards took over, and even how those are processed has changed recently. Launching an app and tapping the smartphone on a credit card terminal is one of the newest ways to pay.
The hotel industry has been keeping a close eye on the latest technology in point-of-sales systems and consumer behavior, watching what has caught on and what hasn’t.
EMV readers
Most hoteliers have cleared the hurdles of installing the EMV card readers at their properties, said Robert Cole, founder of RockCheetah and senior research analyst of lodging and leisure travel for Phocuswright, as the manufacturers have produced enough of the units now. The big setback with EMV readers was the high cost of installing them and upgrading their POS systems, he said, and that’s mostly done now. On top of that, being liable for fraudulent use of someone’s credit card because the hotel doesn’t have an EMV reader for credit card chips comes with a higher price, he said.
Chip and PIN terminals have been prominent in regions such as Europe and Asia for a number of years now, said Robin Moser, senior director of payments and hotel operations system solutions at Hilton.
“We started introducing EMV payment terminals across the U.S. two years ago,” she said. “Due to the complexity of payment systems and existing provider relationships, making the transition can take time. However, we are seeing strong traction, and more than half of our U.S. properties have installed EMV payment terminals to date.”
While almost everywhere else in the world consumers are used to typing in their PIN alongside using the chip in their credit cards, Americans are used to simply signing with their chip, Cole said.
“It’s a U.S.-centric thing and no one really wanted to be the one stepping ahead,” he said.
Cole said he doesn’t see the hotel industry being the one to step in and make this change in consumer behavior. It would take a company like Target or Walmart requiring consumers to use their four-digit PIN to make purchases with their credit cards to make it more widespread, he said.
Mobile payments
While American consumers are becoming more used to paying with the chip in their cards, said Patrick Dunphy, chief information officer at HTNG, it’s more likely they’ll adopt mobile payments through near field communication faster than they will with the chip and PIN method. QR-based payments are also growing in popularity, particularly outside of the U.S., he said.
“(Mobile payments) will be a focus as more and more international travelers come to the U.S. as well as there are more applications for major phone systems supporting it,” he said. “It will be the more interesting trend over the next few years.”
Consumer uptake for mobile payments using NFC has slowed somewhat, he said, but the good news is most EMV card readers allow for mobile pay. It depends on the software and hardware providers, but most of the readers are shipped with the capability for mobile payments, he said.
People are getting used to mobile payments, mostly through Apple Pay or Google Pay, Cole said, adding that he uses mobile payments almost all of the time now.
“I’m getting used to not reaching for my wallet and pulling out my card,” he said.
Consumers will walk into establishments and get notifications on their phones they can use mobile pay, he said. This type of training is how American consumers will become more comfortable with it and use it more often, he said.
Traditionally, payment innovation starts in a retail model where it’s a relatively easy process to pay with mobile, Moser said.
“There’s more complexity in a lodging environment that has a staged approach to payments,” she said. “For example, a guest will provide authorization for incidentals when they arrive. They may purchase food or drink during their stay before paying the full room rate on check out. These staged payments provide some challenges, but we are looking at introducing different types of mobile payment options to guests.”
Mobile payments add a layer of security to transactions, Cole said. Consumers paying with Apple Pay or Google Pay are basically using a virtual card, he said, as it’s not their credit card but Apple or Google’s virtual credit card.
The consumer’s credit card number is not going near that merchant, so they don’t have to worry about the merchant getting hacked, he said. That means putting their trust in Apple and Google, he said, but if it’s a matter of trusting payment information with those companies or a hotel or restaurant, the tech companies are probably going to be harder to break into.
“It’s a very secure system from that side of it,” he said.
Newer developments
POS systems traditionally have been significantly integrated with hotel systems, Dunphy said. Because of the necessity to protect payment card data and personally identifiable information, especially in light of the European Union’s General Data Protection Regulation, there is a push to segment those systems off so they don’t have the level of access to guest information that they currently have, he said.
There isn’t anything currently wrong with it, he said, but segmenting it all out would make it more secure.
“By segmenting those systems more and more, you would only have access to the things you absolutely need (in the POS),” he said.
The POS wouldn’t need access to a guest’s entire profile, he said, but tying in points from a loyalty program would make sense. Airlines have done reward shopping for years with much success, he said.
“That being said, I would expect that level of uptake is significantly different from airlines themselves,” he said. “There’s value to provide more avenues to use their rewards points and find ways to keep guests happy and drive value.”
Hilton is always looking for ways to enhance the guest experience, Moser said. Guest payment preferences vary from region to region and are influenced by the type of purchase, she said, whether it’s a coffee or the room rate.
“We’re constantly reviewing emerging payment options and how we can support a broad variety, so that our guests can use the same payment method at home and internationally,” she said.
Looking to the future, the company strives to create a seamless and consistent experience for guests across any channel, be it online payments, through the Hilton Honors app or in person, using any payment method and at any location.