How could Apple Pay impact the restaurant industry?

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The dinner check might become an item of the past in the restaurant industry. Tim Cook, CEO of Apple, announced the company's latest tech toy that he hopes will be more convenient than a credit card. Apple Pay will allow iPhone 6 users to simply hold down the home button and pick up the tab. Unlike swiping a debit card, the phone only has to be within a short radius of a contactless reader, according to Apple's website. Although it's a simple transaction, it could mean a series of changes for the restaurant industry – here's how.

Swipe and go
For starters, the nature of the product seems to be targeted at some and not all establishments. There's a major difference between someone paying his or her tab at Starbucks and someone settling the bill at a sit-down dinner. In the coffee shop it's: order, give money or a card and take the product. It's a direct person-to-machine transaction. In a restaurant, the point of sales machine is typically located away from the guest and the server does the footwork of the transaction.

Theoretically, if Apple Pay was standardized throughout the service industry in America, it could alter the overall landscape of restaurants. Servers might need to handle guests' cellphones to complete a transaction.

If that's not the case, the guest might need to get up out of his or her seat after the meal to pay at the contactless reader. It could resemble something similar to people paying after eating at the hostess stand at a diner. Perhaps in the future, every payment system will be similar to buying a cup of coffee from a cafe.

Batteries not included
In addition to revolutionizing the quintessential American dining experience, Apple Pay could mean a complete hardware makeover for individual establishments. The Wall Street Journal spoke with the CIO of BJ's Restaurants, Inc., who acknowledged this shortcoming in Apple's latest creation.

"Without several other pretty significant hardware innovations, it's difficult to support a tap-and-pay environment because customers are not standing in front of the terminals," Brian Krakower told the Journal.

A business would either have to install one reader that would be shared among all of the staff and guests or the company would have to put one on every table. This means money and work for a restaurant.

A separate article in the Journal pointed out that contactless readers don't come cheap. The news provider explained that Best Buy had rolled out the scanners a few years ago but quickly revoked that system because it was too pricey for them to handle. According to Best Buy, they won't be getting on board with Apple Pay this time around.

"Many merchants who had NFC acceptance have turned it off," Richard Crone, chief executive of Crone Consulting payment firm, told the Journal.

Security concerns loom
Amid the concerns over money and hardware comes the question of security. In an age where some of the most reputable companies, such as Neiman Marcus and Target, have leaked millions of clients' credit card numbers, is any technology truly safe?

Any transaction that uses a person's bank account information is at risk of a security breach. The U.S. Department of Defense pointed out that cybercrime is more prevalent because of people's increased use of modern technology. Hackers have taken to new extremes to access personal data, including hijacking cell phones.  

Restaurant nightmare
In Australia, some people had their iPhones hacked and then held for ransom, according to NPR. In this case, someone broke in and took over their settings. In some cases, people end up paying to take back control of their phones. Norton Security indicated via NPR that victims of this type of crime have paid around $5 million per year to get their phones back.

Despite these concerns, some feel confident that Apple Pay is encompassed by a strong security. Over 40 percent of active phone users indicated that they were worried about their personal data when it came to smartphone payments, according to Kurt Salmon consulting firm. The company stated that tackling this concern could be the key to the success of Apple Pay.

The rollout of iPay
Moving forward, Subway, McDonald's and Panera will be among the first restaurants to deploy iPay, according to Nation's Restaurant News. Apple had worked with these corporations to create the platform. McDonald's is expected to roll out Apple Pay at some point in October. Senior Vice President Atif Rafiq told NRN he anticipates Apple Pay will bring convenience to the next level.

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