How Do the New Restaurant Payment Apps Stack Up?

Apps that help diners pay for meals with smartphones are still in their infancy, and several are testing the waters in major markets like Chicago, New York, and San Francisco. Promises of added security, lower processing fees, customer analytics, marketing, and increased efficiency for both customers and retailers make these apps an attractive option. Mobile payment apps have low entry barriers for restaurants (many work with existing POS systems and don't require extra equipment), and tout their ease of use for new and potential customers.

Mobile payment offerings run the gamut from chain-specific apps (Dunkin Donuts, Starbucks, Taco Bell), apps that cater more to independently-owned restaurants (Cups, Cover), and broad-scope restaurant apps (Apple Pay, Dash, Pay with OpenTable, TabbedOut). Below, a look at how some of the most popular restaurant payment apps fared in California and New York, and what the implications might be for diners and restaurants.

Flickr / Apple Pay

Apple Pay

Apple Pay is looking to bring mobile payments back from the dead. Google Wallet pioneered the Near Field Communication (NFC)-based mobile payment system in 2011, but failed to convince mobile carriers to incorporate Wallet. But Apple already has 200 million credit cards on file with iTunes, and Apple Pay is pretty painless to use.

You can sign up using the card associated with your iTunes account or using a different credit card number, which is then encrypted and replaced with a 16-digit token known as a unique device account number. This token is stored on your phone, which means your phone does not store your credit card information or share it with retailers. On top of that, this token is tied to your phone, to prevent use of your credit card on another device. Authorizing payments using Apple Pay requires Touch ID, a fingerprint sensor that prevents others from authorizing purchases, even if your phone is stolen. (Apple Pay is only available on iPhone 6 and 6 Plus models currently, but Touch ID is available on iPhone 5S.)

Apple Pay is only usable at 2% of retailers that accept credit cards, but that list includes McDonalds, Starbucks, and Subway, and is expected to grow. One of the major obstacles for restaurants is Apple Pay requires an NFC terminal to process payment, but Apple Pay is making inroads by partnering with other payment apps. For example, Apple Pay is now available as a payment option on OpenTable.

Cover

Cover is looking to make mobile payments seamless and pain-free for both the restaurant and the diner with an excellently curated list of restaurants that use the service. When you first sign up for Cover, you can add your credit card manually (or by taking a photo), and select the restaurant you're in. Cover also lists supported restaurants that are nearby, along with the type of cuisine and atmosphere. At the restaurant, you can "open a table," notify your server that you're using Cover when you order, and close out your tab whenever you're ready. It's an ideal app for eating at the new spots on a busy weekend, streamlining the hassles of weekend dining.

NYC restaurateur Justin Warner says about Cover:

"It's a mutually beneficial relationship. People indeed find out about us through [Cover] and vice versa... The coolest thing about Cover is that it just lubes up the situation. The guests feel cool, we feel cool, and 99% of the time the guests who use Cover are not buttheads. It has benefited our restaurant immensely. It's awesome for buyouts and private events."

Cover does has some downsides. One big drawback is the lack of itemized receipts or access to purchase history, which can make uneven check splitting tricky. It also could be a drawback for diners who need receipts for business expenses or tax purposes.

During one visit, the bartender at a Cover-supported restaurant was unaware the app existed, so staff-education might be an issue. In fact, the biggest issue with all of these apps is that they lack market penetration. In 20+ instances over the course of this month, waitstaff noted Eater was among their first customers to use the payment app, and several bartenders, servers, and PR firms were unaware their restaurants even offered these services.

Pay with OpenTable

Surprisingly, restaurants were least familiar with Pay with OpenTable. The app has many advantages over other payment apps, in that it has pre-existing relationships with 30,000+ restaurants, a deal with Uber (the app gives you an option to hail an Uber before or after your meal), and ApplePay integration. It is offered in eight major cities:
Seattle, Chicago, San Francisco, Los Angeles, New York, Washington DC, Portland, and Salt Lake City.

Yet in five visits to different restaurants, only one server was familiar with the system. In one case the restaurant manager had to be called, and while they spent 20 minutes figuring out why Pay with OpenTable wasn't working, we spent a couple minutes downloading, signing up, and paying our bill with Cover. Cover recognized the restaurant right away, and was able to close us out as soon as we notified the staff. The restaurant was not able to resolve the issue with OpenTable that night.

This seemed to be more indicative of the growing pains of mobile payment apps than of Pay with OpenTable itself, however. Expect many more restaurants to embrace it as it rolls out to more cities. Los Angeles restaurateur Bill Chait (Bestia, Republique) is an early adopter and a fan, and tells Eater:

"[Pay with OpenTable] is a convenience oriented product...fully integrated into our system, and extremely easy to use. It really makes it a lot more seamless, so there's really no downside to it. There's no cost to us. It's just a payment system like Apple Pay. It ends up almost being identical to credit card transaction fees. The payment is just an add-on [to OpenTable's features]. When you open up the table it flashes...so you don't have to double check. It's pretty easy. The system and the server know."

Pay with OpenTable only requires the user to find a restaurant offering their service, make a reservation, and choose to use the payment program (you'll need a credit card or Apple Pay) before you arrive. You'll have access to your itemized bill throughout the meal, and you can pay when you're ready (and/or hail an Uber).

Unfortunately, splitting checks is not an option right now, though it is a promised feature for future iterations. Pay with OpenTable requires you to make reservations ahead of time (which is where OpenTable makes its money), and if you order additional items after you've paid, you'll have to pay separately with credit card or cash instead. It's not for every occasion, or for those prone to making last-minute decisions.

Dash

For something more spur-of-the-moment, you might get Dash. Although Dash may not have as many venue options as Cover (45, compared to 108), it has found its niche. Dash’s focus on bars and more casual restaurants benefits customers who just want to close out their tabs quickly so they can move on. Dash has patented the technology that allows for mobile devices to integrate with merchants' POS systems, and makes the experience hassle-free. The user receives an e-mail with an itemized receipt immediately after they pay. The app itself is extremely user friendly, and you can sign up with Facebook. All Dash venues includes the Google map listing, a preview photo, an ambiance rating, and a phone number, making venues more accessible to users. Also, newer iPhone users can call an Uber or use Apple Pay with Dash.

Unlike Cover, which can also guess your restaurant location with GPS, you'll want to use Bluetooth to check-in automatically. Although Dash doesn't offer new user credit on signup (the only app listed here that does not), they offer credits for friend referrals on top of other discounts on Twitter.

TabbedOut

TabbedOut is the only mobile payment app offered nationwide, and at 5,000+ locations. As an added bonus, they also offer their CRM (customer relationship management) tool Periscope, which provides restaurants with information on customer spending and preferences, user feedback, and the ability to give rewards to first-time and regular customers.

The app doesn't allow for you to check in until you are at the venue. There's a more secure option to join a friend's tab by entering a code, and it provides more helpful information about the restaurant than other apps (Google Maps, website, phone number, special offers available at the venue). TabbedOut's search is a little unrefined, as "nearby locations" list locations 100+ miles away, and sometimes it places the user in Texas (where the company is based). Venue loading is a little slow at times, and there have been issues in both New York and California in which users had difficulty syncing with the restaurant. A couple restaurant managers have noted that they initially had difficulty adding the program to the common POS system MICROS.

The Future of Mobile Payment

There's already a bit of overlap in restaurants offering app payments (though options in Brooklyn and Oakland are painfully lacking), and in a few years we might see restaurants offer these services the same way credit card payment options are offered. It's worth checking out if any of these have restaurants  in your neighborhood. As an added bonus, many of these apps offer discounts of up to $20 for your first use, with credits for friend referrals as well.

The mobile payment app market could go in a ton of new directions: Apps could offer payment alternatives like Apple Pay and Paypal (which is working with MyCheck in London at the moment), and could use their data to provide analytics or offer loyalty programs for restaurants. They could also make their services essential or complementary to diners with social functions like user reviews, friends check-ins, and grouped offers. In a few years, taking your phone out to pay for your bill might be as commonplace as taking out your phone to Instagram your food. Best of all, no flash.