Removing payment friction helps restaurants
With the acceleration of the digital shift seen over the past two years, consumers increasingly expect frictionless convenience in digital and in-person transactions. As these standards evolve, old-fashioned checkout experiences that rely on manual credit card number entry and/or slow wait times can be enough to alienate customers, like those practiced in many many restaurants today could alienate consumers.
On Wednesday, February 23, New York-based B2B Software-as-a-Service (SaaS) restaurant technology company Olo announced the general availability of Olo Pay. With this payment solution, the company intends to make consumers’ saved payment credentials accessible for use at any restaurant on Olo Pay’s network, enabling a more seamless payment experience.
Read more: Olo launches Olo Pay amid competition for frictionless ordering
In an interview with PYMNTS Thursday, February 24, Olo CEO Noah Glass argued that as e-commerce payments evolve from category to category, restaurants that don’t offer faster and more transparent payment options may fall behind.
“Consumers are not only forced to order food for e-commerce. They also use platforms like Shop Pay. They also use Amazon.com. They are used to having frictionless checkout experiences,” he said. “The status quo for orders on restaurant brand sites, where the digital ordering provider is a gateway to a credit card processor really for restaurant card swipes that don’t have to operate in a layer consumer-oriented…it’s not a good enough solution anymore.
The advantage of frictionless payment
Improving payment options can be a valuable way for restaurants to attract customers and increase order frequency, according to data from PYMNTS’ new Restaurant Friction Index, created in collaboration with Paytronix.
Related: PYMNTS Intelligence: How Restaurants Can Leverage Order Limiting Tools as Delivery Demand Grows
The study, which presents the results of a census-balanced panel survey of more than 2,100 American adults, found that 40% of customers say they would be more likely to shop at restaurants offering the possibility of paying online. Additionally, 25% said the same about the ability to pay with a stored card, 24% about the ability to pay in-store with contactless cards, 23% about the ability to pay with digital wallets, and 19% about the ability to pay. with QR codes.
Olo, for its part, brought on former Shopify CFO Russ Jones as a late 2020 board member in a bid to benefit from his experience bringing apps to market. Shop Pay. In fact, Olo was able to make its payment platform available long before its originally planned launch in 2023.
Glass explained that the solution is part of the company’s overall drive to use two-way network models.
“The biggest two-way network of all for Olo is the two-way network between restaurants 79,000 restaurants across 500 brands today on one side and the 85 million consumers… on the other,” he said. . “The idea that a consumer could have their payment details on file…sounded like a huge opportunity.”
Confront the aggregators
Glass says one of the main benefits of Olo Pay is that it helps restaurants adopt their direct-order channels rather than losing customers to third-party aggregator marketplaces.
“When you ask consumers, the majority will consistently say, ‘We prefer to order through restaurant brands’ own direct channels,’ … and yet you see so much volume going through these restaurant delivery marketplaces,” he said. he said, adding that this disparity stems from the fact that aggregators allow consumers to pay for a wide range of restaurant brands using their cards on file.
Indeed, Restaurant Friction Index research reveals that the most commonly cited reason consumers use aggregators is that they think the channel is “simple and more convenient”, with 63% of consumers citing this simplicity as a key motivator. .
Glass cited Shop Pay’s reports of a shopping cart conversion rate 1.72 times higher than traditional payment as an example of the potential of borderless payments.
“It’s just profound when you think about the number of sales left on the table by operators having the status quo checkout experience in their digital ordering platform,” he said, “and not something that really meets the needs and expectations of this on-demand consumer.
360 degree view of restaurant customer
Also on Wednesday, Olo announced its acquisition of Omnivore with the aim of offering open check functionality for on-site dining. The move is an important step toward the company’s goal, as described in a conversation with PYMNTS’ Karen Webster last May, of moving from “digital primacy to digital completeness,” with Olo aiming to be a key of each restaurant transaction.
See also: Olo’s Noah Glass on Powering the $1.6 Trillion ‘Eats’ Ecosystem
Following Olo’s acquisition of customer intelligence and engagement platform Wisely last fall, the integration of Omnivore’s on-premises technology enables the company to create a more complete profile of the omnichannel restaurant customer. , leveraging both offsite and onsite transaction data.
More details: Restoration platform Olo will wisely buy data company for $187 million
For example, he noted that the top 20% of restaurant customers typically account for 60% of transactions. These kinds of data analytics capabilities could allow restaurants to target their menus, workforce deployment, and even store openings to these consumers.
“All of these things are informed by understanding customer lifetime value and taking a customer-centric approach to operating the restaurant business,” he said. “I think it’s a massive unlock that Wisely has enabled, and I’m so proud that it’s now part of Olo’s history.”
NEW PYMNTS DATA: ACCOUNT OPENING AND LOAN SERVICE IN THE DIGITAL ENVIRONMENT
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