On May 22, 2010, an off-premises customer paid the 2019 equivalent of over $71 million for two pizzas. Reaching out on a cryptocurrency forum, Laszlo Hanyecz pledged 10,000 Bitcoins to anyone who would make the delivery, which amounted to only $41 at the time. Ever since, the internet has commemorated this event, now called Bitcoin Pizza Day, by publishing articles on the present value of this transaction—showing that being an early adopter can sometimes be costly in the long run.
Thankfully, neither consumers nor restaurants have used this scenario as an excuse to avoid adopting new payment technologies like cashless transactions, integrated payment processors, and digital wallets. Between 2013 and 2018, cash transactions decreased from 89% to 77% of the world’s payment activity, reflecting society’s growing comfort with cashless methods of payment. Here are some trends in payment solutions your restaurant needs to know about for 2020:
Smaller Purchases Are Going Cashless
In the U.S., 70% of all payments were cashless, and 68.7% of households had a credit card by 2017. Fast forward to 2019, and more people are using cards for ever-smaller purchases. Harvard Business Review conducted an analysis of Square users and found that 50% of consumers used a credit or debit card for purchases as low as $4.50. This is a big difference from 2015, when the average transaction size for this group was 78% higher.
This trend has been more pronounced outside of cities in recent years. In 2015, consumers in the top 25 metropolitan areas spent a minimum of $5 using credit or debit cards, and this amount has dropped by 20% to $4 in 2019. Outside of urban areas, however, the minimum purchase has decreased by 31.25% from $8 to $5.50 for the same time period.
As a result of consumers’ preference for plastic, restaurants and coffee chains that have smaller check averages are less hesitant to go cashless. An owner of three coffee shops in the HBR study estimated that accepting only plastic saves him an hour and a half each day, as he no longer has to run to the bank to deposit cash.
More Restaurants Are Seeing the Value of Integrated Payment Processors
Even as credit cards get more ubiquitous, their processing fees vary greatly, depending on the processing method, average transaction size and type of business. Integrated payment processors offer the ability to bundle multiple services into a simple monthly fee and connect payment data with your restaurant’s point of sale system. PAR Pay, for instance, integrates with any brand of POS terminal and can read EMV chip-enabled cards in only 3 seconds.
Restaurants that use an integrated payment processor can have the latest security technology, including PCI and PA-DSS v3.2 compliance, while also improving their efficiency. Once a transaction occurs, payment information syncs with the accounting program connected to their POS system rather than needing manual entry, saving on time and labor.
Consumers Are Receptive to Alternative Payment Technologies
In a study by the Deloitte Center for Financial Services, 66% of consumers expressed interest in using new payment technologies if companies offered similar rewards as credit cards. Beginning in 2020, Citi’s WorldLink payments solution will allow for direct transfers into PayPal accounts, reflecting consumers’ growing appetite for speed and convenience. No longer is it acceptable to wait three to five days to transfer money, especially since consumers are used to reloading gift cards and digital wallets on their phone with same-day funding.
Currently, 17 major restaurant chains accept PayPal, including McDonald’s, KFC, Panera, Papa John’s and Applebee’s. Some even have their own payment apps, like The Cheesecake Factory’s CakePay, to give customers yet another payment method to use.
For more information on payment processing trends, check out our post on the real reasons your customers are committing friendly fraud.