New payment systems

Virtual payment is the future

Virtual payments are becoming a reality – not only in China but in other parts of the world, too. With various smartphone-based payment systems also launching in Germany recently, the hotel industry should prepare accordingly.

text: Jan Rähm  //  photography: istock

The country needs new payment systems: Cash is king in Germany. Signs saying “No card payments” can still be found daily in restaurants and shops. However, more and more people in the country want to be able to pay for things electronically. Not only with a debit or credit card, but also using mobile phones or other means.

Virtual payments are already commonplace for internet purchases. According to a survey by the industry association Bitkom, more than 65% of all customers already use online payment service providers such as PayPal or Amazon Payments. While cash remains the undisputed preferred payment method for over-the-counter business and the catering trade, credit and debit cards are the clear winners in the hotel industry. However, known online-retailing payment methods are gaining importance. For example, in a study published in 2018, the retail research Institute EHI found, among other things, that popular e-Commerce payment methods are being increasingly offered for over-the-counter trade.


Using mobile phones for non-online purchases is becoming easier

Special browser-based payment systems are not widely used for over-the-counter trade or in the hotel industry, even though they enable a customer to settle their bill on the spot at a terminal using virtual payment methods.

New, smartphone-based card terminals such as those offered by SumUp or iZettle are far more widespread and practical. These are small devices, hardly bigger than a credit card, which connect to a smartphone or tablet via Bluetooth. As well as supporting debit and credit card payments, these modern terminals are also already compatible with the gradually emerging virtual payments process, which uses smartphones or smart watches.

Mobile phones as a means of payment

So far, opportunities for virtual, smartphone-based payments have been slow to take off in Germany. However, 2018 could become the year of mobile payment methods. For example, search-engine giant Google launched it’s “Google Pay” solution in the middle of the year. And the long-heralded “Apple Pay” launched End of 2018. This has already been available in selected countries worldwide for over four years. High-tech manufacturer Samsung also offers a similar independent payment system through “Samsung Pay”, which has already gone live in some countries across the world and could launch soon in Germany. The savings banks and cooperative banks have also launched similar independent solutions in 2018.

A common feature of all these solutions is that payment card data is stored in an app. Whereas the Apple and Google solutions have (so far) only allowed the use of credit cards (which must be issued by participating banks), the apps offered by the savings banks and cooperative banks also accept debit cards.

New technology, proven payments

The method and fundamental payment process are identical: the hotelier initiates the payment using the payment terminal. The customer holds their smartphone or their smart watch in front of the terminal and contact is established using near field communication (NFC). The customer enters their PIN to confirm the payment. Generally, no PIN is required for amounts less than EUR 25. This is especially practical for fast payments at the bar or in hotel shops.

The costs of the whole process are little different to those for conventional card-based payments. The customer incurs no costs within Germany. The hotelier pays a certain percentage to the system provider. The risks are also comparable – possibly even somewhat lower because biometric access locks ensure a reduced likelihood of a customer using a stolen smartphone. An added benefit for hoteliers is the simpler use of a wireless-based payment system with no read errors such as those experienced with systems relying on chips and magnetic strips. However, if a hotel wants to make all customers feel equally welcome, it must support all the established payment methods, which can mean having several readers and service providers.

“Mobile money” for business customers

Business customers can use a further type of virtual payment method. We have recently seen the emergence of virtual credit card suppliers. For example, HRS offers these in cooperation with AirPlus International and American Express. Companies can generate single-use card data for their employees, who then use the data to book their stays. The advantage: the credit card can only be used once and cannot be lost or misused. The number transmitted does not enable staff on reception to identify that the employee is using a virtual card. A detailed, paperless bill is issued for the stay.

Some banks also offer this form of virtual credit card. The card number is generated on a case-by-case basis via an online portal or a corresponding interface within the company’s IT system and forwarded to the employee. They can then use the “card” to book their trip as usual.

Simpler, faster, more secure

Virtual payment systems make the payment process simpler and faster for hoteliers. Security is also increased thanks to the advanced security features of smartphones and the opportunities offered by virtual disposable credit cards. Every hotelier just needs to be prepared. The appropriate readers and confidence in using them are essential.



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