REPORT FROM THE U.S.—Contactless payment technology has made headway into the retail space, but so far there hasn’t been enough demand from guests for the U.S. hotel industry to fully adopt it, hoteliers said.
Best Western Hotels & Resorts is exploring near-field communication (NFC) payment options, but hasn’t yet reached the consumer tipping point to make adoption worthwhile, said Greg Adams, SVP and chief digital officer. The company has been researching, and the next step would be a beta test, he said.
“We have a lot of people out there who do use mobile payments,” he said. “At the same time, when we look at it in aggregate, where are we going to have the biggest impact on consumer experiences? What’s going to make a meaningful difference to them?”
What is contactless payments?
Contactless payments involve a pay terminal that accepts transactions through a contactless chip credit card or mobile device via an app, according to Hospitality Technology Next Generation’s “HTNG NFC Contactless Payments White Paper.” NFC allows consumers to “wave or tap their mobile device over the merchant’s contactless terminal to exchange information without needing to connect the devices together.”
Many payment terminals are technically capable of accepting contactless payments, but the technology has to be enabled by the hotel payment service gateway, said Armand Rabinowitz, senior director of strategy and workgroups at HTNG. That sometimes requires an update of point-of-sale firmware or of the credit card terminal itself, he said.
The costs to upgrade are not nominal, but also not in the four-figure range, depending on the terminal, he said. In most cases, cost will be determined by the selection of vendors, he said. There is an inherent cost to changing vendors, but sometimes a better deal can be found by investigating the payment provider terms, he said.
Rabinowitz said it makes sense to upgrade payment systems to the latest capabilities and features available, adding that the benefits of contactless payments include better customer service, better security and faster service.
“Hotels are always trying to improve and reduce the amount of time guests spend checking in,” he said.
Giving guests a choice is another benefit, he said. As people carry fewer cards with them, they want to leverage their mobile wallets more, he said.
“It’s wise to make investments that will (enable) you to service those types of customers,” he said.
There might not be immediate demand for it today, but it’s an investment in a type of payment experience that isn’t much more complex or expensive than existing systems, he said.
Exploring the space
New Castle Hotels & Resorts is keeping an eye on NFC technology, but first had to address chip-and-pin transactions for table-side payments, as a fraud deterrent, said Al Zaccario, VP of IT and cybersecurity.
Table-side processing, “plus a higher processing fee … is more important to us at this point,” he said.
The company is specifying equipment that can handle NFC payments as well as chip-and-pin for future expenditures, he said.
Brands are slower to adopt new technology into standards, which limits what operators can do, Zaccario said. If they don’t accept Apple Pay or Samsung Pay, there’s no way to integrate that, he said.
If it ever did become a brand standard, the deployment would not be rapid given the overall volume and scale, he said. It might take several months or years before the brand companies come out with something, but the NFC entities are likely already talking to them, he said.
The company’s independent properties haven’t had enough guest demand for NFC payments to warrant the additional cost at the moment, he said. For New Castle, the tipping point would be receiving more than 10 requests a week for it, he said.
“We don’t see enough demand right now to drive the expense in the separate processing abilities and hardware abilities,” he said. “If we do see that, we will pick that up.”
Sometimes being among the first adopters can be effective, but other times it’s not, Adams said, citing adoption of Google Glass as a misstep for many.
There are technology adoption waves, he said. Sometimes there is an early peak, such as when a new technology is talked about by the news media, but then a decline after people have explored it, he said.
Blockchain is another example, Adams said. Everyone was talking about how to integrate blockchain, even Best Western, he said. While the technology is useful, he said, it’s similar to being an early adopter of the telephone.
“When you have a phone but no one else has it, who is it you’re going to talk to?” he asked.