Restaurant Payment Options: Customer Payment Methods Guide

July 16, 2023
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Consumers tend to favor different restaurant payment options, and they can change often. These include integrated payments, mobile and contactless payments, and EMV payments. 

Offering different customer payment options at your restaurant provides convenience and security. It helps with customer retention strategies and welcomes new customers. 

This guide covers various restaurant payment options for customers and why they’re beneficial to have. With this information, you can consider expanding the customer payment methods you offer at your restaurant.

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6 Common Restaurant Payment Options

Most businesses accept cash and credit card payments. However, if you stick to these customer payment options, you may end up limiting your customers. It’s possible that it will also hurt your relationship with future customers. 

Staying up to date with current restaurant payment options and trends is essential. These include having a customer facing display, an mPOS system, and modern POS software

Six common restaurant payment options that you should consider include: 

1. Cash

Cash is a simple and traditional way to pay at brick and mortar restaurants. As long as the restaurant manager follows accurate restaurant bookkeeping protocols, there is not much to worry about in terms of risk.

It’s possible for restaurants with online ordering to also offer cash payment options upon delivery or pick up. This is ideal for customers that aren’t fond of using online payments.

2. Credit and Debit Cards

Credit or debit card payments are also referred to as plastic payments. These are linked to the customers’ bank accounts, and they use restaurant payment technology to transfer information to complete the payment. 

With plastic payments, the customer has to either swipe, insert or tap the card to begin the payment process. Verification may be necessary such as entering a PIN or expiration date. 

3. Check or eCheck

Paying with checks or eChecks is a bit outdated, but it’s still a common payment method amongst older customers. There are no need for payment processors and there are little to no merchant fees associated with these customer payment options.

4. Mobile Payment

These days, mobile devices are taking over and this also applies to payment methods. Mobile restaurant payment options are a kind of contactless payment. They include Apple Pay, Google Pay, and Samsung Pay. 

Mobile payments are secure, fast, and convenient to use. It’s also possible for businesses to track customer data such as their average spending and how often they dine. This information is useful for tailoring restaurant marketing strategies

5. PayPal

Since 1998, PayPal has been known as a secure and trustworthy online payment option for customers. It’s possible for restaurants to use PayPal as one of their restaurant payment options for customers. This is so customers don’t need to carry plastic payments with them. PayPal is also one of the great restaurant payment options to use for online menu ordering

6. Gift Cards

Both gift card and store credit payments are ideal customer payment options, even though they’re not as common as they once were. Store credit encourages customers to spend more money at an establishment and gift cards help introduce new customers to the restaurant.

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What Is Contactless Payment?

Contactless payment is a payment method that doesn’t require physical contact between the customer’s plastic payment and the POS system. It’s possible for customers to make contactless payments with physical debit and credit cards and mobile devices. 

As a business owner in the restaurant industry, you want to please your customers. Utilizing different kinds of restaurant payment technology, such as contactless payments as one of the restaurant payment options, is all about convenience.

Types of Contactless Payment

There are two commonly used types of contactless payments. Each one involves different technology that ensures a successful payment. 

  1. Contactless mobile payment. These restaurant payment options involve a mobile device with Apple Pay, Samsung Pay, or Android Pay. A customer uses near-field communication (NFC) to capture and transmit payment information. 
  2. Contactless EMV payment. Customers can use contactless EMV payments with EMV-compliant debit and credit cards. However, this is only possible when merchants have NFC-enabled EMV readers. 

What Are Integrated Payments?

Integrated payments allow businesses to avoid manually entering transaction data in accounting sheets. This is possible by automating the accounting process. Integrated payments connect POS systems with payment processors. This is necessary in order to allow for a seamless flow between one platform and another. 

Integrated vs Non-Integrated Payments

There are two possible types of payments that can be made through a POS system. These include integrated and non-integrated payments. 

To better understand the difference between the two, read through the following examples:

Integrated Payments Example

The step-by-step checkout process for an integrated payment will resemble the following scenario: 

  1. Scan the item’s SKU number or key in a restaurant bill to begin a new transaction.
  2. Select the customer’s preferred payment method (cash, credit, debit, etc).
  3. The restaurant POS system will automatically transmit the payment information to the terminal and complete the transaction. 

If your restaurant has an online ordering platform, you can still accept payments online. During this checkout process, customers add items to their cart and enter their personal and payment information at checkout. Their order is completed and the payment process is completed without being redirected to third-party sites. 

Non-Integrated Payments Example

With non-integrated payments, there is no communication with POS systems. The following scenario shows an example of how an employee can complete this kind of payment at a restaurant: 

  1. Start a new transaction by keying in or scanning items
  2. Employees select the customer’s preferred payment method
  3. Manually input the total order amount into the terminal
  4. Once payment is complete, the terminal prints a receipt for the business and another for the customer
  5. It’s now necessary to manually mark the order as paid and complete the transaction in the POS

A restaurant with online ordering that uses a non-integrated payment system typically has longer payment processes. This is because customers are redirected to a third-party platform to complete their payments. These third-party platforms include PayPal. 

What Are Mobile Payments?

Mobile payments allow customers to pay for transactions through mobile devices such as smartphones and tablets. These payments can be made in person or online, such as O2O

Six common mobile payments include: 

  • Mobile wallet. Customers connect their mobile wallet or app to their credit card or bank account. It’s a contactless payment method that uses NFC technology.
  • Mobile bank. To complete mobile bank transactions, customers transfer money from one bank account to another through a mobile device or app.
  • SMS. Special text codes are used to complete SMS payment transactions. 
  • Mobile-to-mobile. This kind of payment is made by transferring funds from one mobile device to another. 
  • Near-field communication (NFC). An NFC payment is a kind of contactless payment method. It uses radio waves to complete transactions in close proximity to a contactless POS system.
  • QR code. One of the many QR code uses is to make payments by scanning QR codes on mobile devices. 

What is EMV Payment?

An EMV payment refers to a credit or debit card with a chip. Once the credit or debit card chip is inserted into the card reader, the chip transmits all financial data to the appropriate financial institution. 

EMV payments are more secure than magstripe payments. It’s one of the most commonly preferred restaurant payment options for customers because of its security. The chip stores digital codes that are unique to each purchase. This is what makes it difficult to steal card data. 

​​Pros of EMV Payments

EMV payments provide additional security to customers when making payments compared to magstripe payments. This security is similar to that of integrated payments. 

Three pros of EMV payments include: 

  1. Fewer chargebacks. More transaction security results in fewer chargebacks and fraudulent occurrences. These can get costly over time for the restaurant business
  2. Easy upgrade options. Depending on your existing hardware, it is easy and affordable to upgrade to EMV payment systems. 
  3. Customer protection. When opening a business and opening a restaurant, it’s important to build trust with your customers. That’s why offering secure restaurant payment options, like EMV payments, is essential. Cards with EMV protect customers, leading to fewer customer disputes and increased customer satisfaction.

Cons of EMV Payments

There are different kinds of EMV payments and some are less secure than others. A less secure EMV payment method includes a customer inserting their card without authorizing the payment using a PIN. This process is similar to using older or out-of-date restaurant technology.

What is Magstripe Payment?

A magstripe payment refers to payments made using a magnetic stripe card. The magnetic label on the card transmits financial data to card issuers. Customers authorize a purchase by swiping their card through the card reader. 

Pros of Magstripe Payments

When plastic payments were first introduced, magstripe payments were the traditional method of paying with plastic. 

Here are some pros of using magstripe payment methods:

  • Simple to use
  • Cheap to produce
  • Increased security with PINs

Cons of Magstripe Payments

Over the years, magstripe payments have become less popular. In fact, EMV payments have taken over as a result of this.

Here are the cons of using magstripe payments:

  • Not as secure as EMV payments
  • Limited data storage capacity
  • Magnetic strip data can be destroyed with strong magnetic fields
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Preventing Credit Card Fraud in the Restaurant Industry

Credit card fraud refers to stealing information from credit or debit cards and using it to process payments. Such information includes PINs or physical cards. These payments mainly occur without the cardholder’s knowledge.

Five ways to prevent credit card fraud at your restaurant include:

1. Using an EMV Reader

EMV readers are payment processing devices that prevent counterfeit fraud. This can also result in a decrease in chargeback liability. 

Incorporating EMV restaurant payment options will protect customers from fraudulent charges and helps them feel more secure when paying. It’s important to have POS system features that accept EMV payments. 

2. Setting Up Mobile Payment Options

Mobile payments, such as Apple Pay, Android Pay, Samsung Pay, and Google Wallet, allow customers to make fast and convenient payments. These restaurant payment options are more secure compared to traditional credit card payment methods including swiping. 

This kind of payment transfers a coded version of a customer’s financial information to authorize the transaction. The codes are what protect customers from fraud. It’s possible to accept mobile payments using an mPOS system and a food truck POS

3. Using Point-to-Point Encryption

There are point-to-point encryption (P2PE) standards set by the PCI Security Standards Council to protect customer information. These standards are in place for all credit card processing companies

P2PE algorithms encrypt the customer’s card data after it has been swiped through the POS card reader. The encryption turns into a code and is sent to the payment processing company that is allowed to decrypt the information. 

These standards protect businesses and customers from cybersecurity attacks and breaches. They also ensure secure transaction processing for all parties.

4. Ensuring PCI Compliance

All restaurant POS systems and payment processing devices should be payment card industry (PCI) compliant. This is a kind of security measure that payment card companies enforce in order to protect parties from cyberattacks. 

Restaurants that collect and store customer information, including information for a loyalty program, should be PCI-compliant. 

To be PCI-compliant, you should do the following: 

  • Use and have updated antivirus software
  • Protect the stored customer information
  • Restrict access to customer card information
  • Install and maintain a system firewall
  • Create a privacy policy for customers describing all the information you collect and the reasoning for it
  • Perform IT system and processes security tests regularly 

5. Using Payment Processor Tokenization

Tokenization protects sensitive information from getting into the wrong hands. A cardholder can protect their account information using tokenization because the process replaces the account number of a card with a token. That token consists of unique characters including letters and numbers. 

Payment processors that use tokenization don’t store card numbers on-site. Instead, they store it off-site in a secure location using a token in place of the card number. 

Tokens are randomly generated and can’t go back to the original number. The extra level of security is what makes restaurant payment options with tokenization so popular.

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