Since I began reporting and writing about the payments industry in late 2007, I’ve come across what seems like an infinite number of products and services that either fall flat on their face shortly after launch, slowly gain traction over a number of months or skyrocket to immediate success. Tabbedout, which is a mobile-payment application intended for the hospitality sector, falls somewhere between the latter two outcomes I described.
The idea behind Tabbedout is simple. You link a credit or debit card to the app, which you then can use to pay your bill at a participating bar or restaurant. When you open a tab on the app, you receive a unique code to give the server or bartender so they can track your order through the corresponding software on the merchant’s point-of-sale system. At the end of night when it’s time to leave, you simply press a button to pay your tab. That’s it. No waiting around a busy bar and fending off others to get the bartender’s attention to pay your bill. But what sounds good on paper does not always work in real-world situations.
A couple of weeks ago, three Mercator analysts, our friends and me decided to test Tabbedout in Cambridge, Mass. at Charlie’s Kitchen, which is a stone’s throw away from Harvard University. Our mission was to test Tabbedout’s limits. We learned at the end of the night that the merchant might have a large part in how successful any mobile-payment application can become in the long-term.
Trouble immediately greeted us when we arrived on a Friday night after work. When I told the server I intended to pay my portion of the bill with Tabbedout, she was unfamiliar with the app. Only one staff member really understood how it worked. And that’s something Tabbedout recognizes as a problem.
“We know staff turnover at these places is high,” Arturo Coto, Tabbedout’s vice president of marketing, told me in an interview.
Tabbedout created an online learning management system that bar and restaurant staffers can access through Facebook. The company also is engaged with the establishment throughout the entire implementation process through phone calls and site visits.
Coto also noted one challenge Tabbedout faces is in its own market-by-market penetration strategy. For example, Tabbedout users in cities such as Portland, Seattle and Austin, Texas have little to no problems using the app because many merchants in the area accept it as a payment option and are familiar with it.When Tabbedout has multiple bars and restaurants in one city accepting the app as payment, “the consumer experience is much better,” Coto said.
In the Boston area, only Charlie’s Kitchen and Red Lantern, a sushi restaurant, accept Tabbedout. Coto anticipates in the next year that more merchants in Boston and the city’s immediate surrounding areas such as Cambridge will accept Tabbedout. “That will help lower the problems you faced,” he said.
Back to the experiment, which got a bit more rocky as the night went on.
Once my server returned after asking someone behind the bar about Tabbedout, she told me we could try it out and see what happened at the end of the night. I proceeded to give her the unique code so she could keep track of my order. But no items were ever entered into the system.
We learned this when David Kaminsky, an analyst for the Emerging Technologies practice, tried to join my tab, which the app enables you to do. He could not, which meant my items, and really the everyone’s in general, were not put into Tabbout’s corresponding register software. Had the process worked as it was intended, Kaminsky at the end of the night could have paid his portion of the bill from my tab from his phone.
At some point during the night, I noticed my tab timed out on the app because no items were added. Tabbedout does this as a security measure, Coto said.