Since I began reporting and writing about thepayments industry in late 2007, I’ve come across what seems like aninfinite number of products and services that either fall flat ontheir face shortly after launch, slowly gain traction over a numberof months or skyrocket to immediate success. Tabbedout, which is amobile-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 debitcard to the app, which you then can use to pay your bill at aparticipating bar or restaurant. When you open a tab on the app,you receive a unique code to give the server or bartender so theycan track your order through the corresponding software on themerchant’s point-of-sale system. At the end of night when it’s timeto leave, you simply press a button to pay your tab. That’s it. Nowaiting around a busy bar and fending off others to get thebartender’s attention to pay your bill. But what sounds good onpaper does not always work in real-world situations.
A couple of weeks ago, three Mercator analysts, our friends and medecided to test Tabbedout in Cambridge, Mass. at Charlie’s Kitchen,which is a stone’s throw away from Harvard University. Our missionwas to test Tabbedout’s limits. We learned at the end of the nightthat the merchant might have a large part in how successful anymobile-payment application can become in the long-term.
Trouble immediately greeted us when we arrived on a Friday nightafter work. When I told the server I intended to pay my portion ofthe bill with Tabbedout, she was unfamiliar with the app. Only onestaff member really understood how it worked. And that’s somethingTabbedout recognizes as a problem.
“We know staff turnover at these places is high,” Arturo Coto,Tabbedout’s vice president of marketing, told me in aninterview.
Tabbedout created an online learning management system that bar andrestaurant staffers can access through Facebook. The company alsois engaged with the establishment throughout the entireimplementation process through phone calls and site visits.
Coto also noted one challenge Tabbedout faces is in its ownmarket-by-market penetration strategy. For example, Tabbedout usersin cities such as Portland, Seattle and Austin, Texas have littleto no problems using the app because many merchants in the areaaccept it as a payment option and are familiar with it.WhenTabbedout has multiple bars and restaurants in one city acceptingthe app as payment, “the consumer experience is much better,” Cotosaid.
In the Boston area, only Charlie’s Kitchen and Red Lantern, asushi restaurant, accept Tabbedout. Coto anticipates in the nextyear that more merchants in Boston and the city’s immediatesurrounding areas such as Cambridge will accept Tabbedout. “Thatwill help lower the problems you faced,” he said.
Back to the experiment, which got a bit more rocky as the nightwent on.
Once my server returned after asking someone behind the bar aboutTabbedout, she told me we could try it out and see what happened atthe end of the night. I proceeded to give her the unique code soshe could keep track of my order. But no items were ever enteredinto the system.
We learned this when David Kaminsky, an analyst for the EmergingTechnologies practice, tried to join my tab, which the app enablesyou to do. He could not, which meant my items, and really theeveryone’s in general, were not put into Tabbout’s correspondingregister software. Had the process worked as it was intended,Kaminsky at the end of the night could have paid his portion of thebill from my tab from his phone.
At some point during the night, I noticed my tab timed out on theapp because no items were added. Tabbedout does this as a securitymeasure, Coto said.
One of my friends brought up a very good question, what happens tothe person who decided to leave home with just his wallet andidentification because he knew he would be at Charlie’s all night?How does he pay then? “The hardcore users will talk to the managerto get everything straightened out,” Coto said. And that’s theproblem Charlie’s is facing at the moment: it obviously does notget a lot of customers using Tabbedout, which leads to an unevenexperience on both ends.
Kaminsky actually ended up going to Red Lantern and had a pleasantexperience, but there was a bit of a catch. His server was a formeragent for an independent sales organization. That is not going tohappen every day.
I promised Coto I would return to Charlie’s alone to see if I had adifferent experience. What would really help Tabbedout at thispoint is more merchants in the area, especially Cambridge andSomerville (where I live), to accept Tabbedout. Coto recognizes thearea around Harvard as an ideal market to penetrate.
What also might help Tabbedout is the introduction of a loyaltyand rewards system merchants can use as a customer acquisitionprogram. Coto said the company plans to launch this feature laterthis year.
And maybe that comes right about the time for a return visit toCharlie’s.