What goes with taxis? Bars. Restaurants, too. So what? Well, in the Era of the App, two things are sacred: the first is being able to corner your market and entice consumers with a product that does something better than everyone else.
The second is synergy. As digital disruptors look for innovative ways to monetise themselves, partnerships that further benefit customers are becoming increasingly popular -- think music streaming and telcos (From Napster to Spotify: The next step in streaming culture, March 7) or retailers and social media (Twitter and Amazon introduce hashtag shopping function, May 6).
One of the most hyped-up industries at the moment is the taxi-hailing app crowd. Despite regulatory setbacks, the likes of Uber and local players ingogo and goCatch are growing exponentially as they undercut the traditional taxi industry’s model with convenience, reliability and affordability in spades.
But one sector that’s very much due for some serious disruption in terms of payment platforms is hospitality.
In the last year or so a new flavour of mobile payment apps has emerged, allowing punters to open, share and close tabs, all from the convenience of their smartphone. Some have even hailed these the ‘Uber of the hospitality industry’.
Overseas, there are names like TabbedOut, Dash and Cover in the US; Flypay in the UK; and Israel’s MyCheck, which also has offices in London and New York and which bagged $US6.1m in Series A funding last year.
At home, there are two platforms, both launched last year within months of each other, that have made headway in the battle for the Australian bar: Clipp, based in Sydney, and OneTab, based in Brisbane. A third app, Aston Club, is also growing rapidly (these guys have a cool 'exclusive club' marketing schtick going on too) but is largely focused on Melbourne for the time being.
All of these apps typically integrate with a venue’s existing point-of-sale system; generate revenue from transaction fees; allow customers to add friends to their tab, and set or amend a spending limit; email tax invoices automatically; provide peace of mind for venues by pre-authorising cards; and may also provide customer data and analytics or promotional tools.
Beer and skittles for everyone
Mobile bar tab payment apps are a boon for both sides of the equation, providing convenience for punters and efficiencies for vendors -- less time spent on processing each transaction manually adds up to less money spent on wages, or more time spent delivering quality customer service. Corporate customers should particularly warm to the ease of managing and tracking entertainment budgets.
Meanwhile, tools such as Clipp and OneTab are set to become increasingly popular with Australian venues when chip and PIN payments are mandated from August 1 and credit card signatures bite the dust, meaning venues won't be able to charge credit cards if a customer leaves without closing their tab.
Clipp co-founder Greg Taylor told Business Spectator that the looming chip and PIN deadline has been an enormous driver to signing up more venues.
“It’s a seismic change to the hospitality space,” Taylor says. “We’ve had between five to 10 inquiries per day with people coming in asking for a solution. It’s absolutely accelerated our growth on the venue side of things, not only to solve the problem but because a lot of venues are looking to create opportunities for efficiencies and also to create a much nicer experience for their customers.”
Launched in April last year in Sydney, Clipp raised $1.55m in November with the help of KIS Capital Partners. This week the start-up made its first foray into WA, adding 30 new venues to bring the total number of establishments on board to 160 nationwide. Clipp is also about to recruit three more employees -- including a CEO -- bringing its staff to 10.
Clipp currently generates revenue from transaction fees as a merchant would, but Taylor sees huge potential in leveraging data to build synergies with other businesses as his company grows.
“When the customer closes a tab, what’s the next product they want?” he says. “There are a lot of synergies between those products that are creating a cashless environment within the hospitality space … You close your tab, you book a taxi through Uber, goCatch, or ingogo, and the data we capture will be very reliable around brands. For instance, what particular type of drink you like and what venues are in your area. And that’s where we can engage with brands and put in place loyalty offers like happy hour or vouchers.”
The race is on
Meanwhile, rival OneTab is also expanding rapidly. There are 50 venues currently available through the app but there are more than 100 signed up in total, with some yet to go live. With a staff of three, OneTab’s operation is smaller than Clipp’s but co-founder Scott Cross told Business Spectator the company plans to expand following its $2m capital raising, announced last month.
To bolster its reach, OneTab has partnered with the Australian Pub Fund -- backed by heavyweight investors Mark Carnegie, John Singleton and Geoff Dixon -- which is rolling out the service across all its venues in NSW and Queensland.
Meanwhile, both Cross and Taylor told Business Spectator they are each in negotiations with big hospitality players and will announce deals soon.
The battle for the bar may be heating up between the two companies, but Cross maintains there is room for two players in the Australian market.
“Here’s my comparison: is there room for Visa and Mastercard? Absolutely,” he says. “For venues, it’s a no-brainer. Personally I think down track the smartest thing for a venue to do is not to bet on one technology. If you accept Visa, Mastercard, Amex, OneTab and Clipp, at the end of the day the consumer has more options and it doesn’t matter to the publican.”
While there are venues that already offer both payment services, there are also a range of variables in the mix -- such as app design, number of compatible POS systems, and pricing -- that may eventually decide whether one platform flies while the other falls over, even if these differences are subtle.
“I think the only difference from us is purely monetary values -- we deliver our service to venues cheaper,” says Cross (OneTab runs its own payment gateway, while Clipp uses PayPal).
Ultimately, it will be the consumers and venues who lead the way as our growing addiction to mobile apps goes out on the town.
“The race is on,” says Cross. “It should be fun.”