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Electronic payments have grown exponentially over the past few years in the quick-service restaurant industry. Today more than eight out of 10 QSR operators now let guests pay by credit or debit card, according to the National Restaurant Association's 2004 Quickservice Operator Survey. The growth is being fueled by a variety of factors including new point-of-sale technology that reduces the time it takes to process electronic payments.

Electronic payments can boost sales at your restaurant. Consumer surveys show that more than 60 percent of guests say they would visit a QSR outlet that accepts payment cards more often than a QSR that accepts only cash. In its annual consumer survey, STAR, the leading debit network, found that consumers spend 32 percent more when paying with their debit card than when paying with cash.

While the benefits of accepting electronic payments are apparent, the differences between the many payment options are not as obvious.

Most operators know that the two basic electronic card payment types are credit and debit.

In addition, most QSR operators realize that a credit card allows a customer to purchase now and pay later, whereas a debit card payment deducts directly from the cardholder's bank account.

However, there are two types of debit cards, PIN-secured and signature-based.

Debit is the fastest-growing payment type in the country, and, according to a recent study by the American Bankers Association, consumers prefer it to credit.

Both signature and PIN-secured debit transactions deduct from the cardholder's checking account, but that is where the similarities end.

PIN-secured debit transactions require a personal identification number, or PIN. This requires the operator to have a PIN pad at the point-of-sale. A cardholder enters the PIN to authenticate card ownership and authorize the transaction.

A PIN-secured debit transaction removes funds from the cardholder's account almost immediately. PIN-secured debit transactions are processed over electronic fund transfer, or EFT, networks, the same as an ATM transaction.

By comparison, if the customer signs for a debit transaction without the requirement of entering a PIN, it is a signature debit. This transaction closely mirrors a credit transaction at the point-of-sale.

Recent changes by the card companies eliminate the need for signatures when processing signature debit or credit transactions and make receipts optional for low-ticket industries like QSR. The purchase amount deducts from the cardholder's account in about 24 hours.

Electronic payments have penetrated the QSR market. Providing consumers with their payment of choice, whether PIN-secured debit, signature debit or credit, is a good idea, as is finding partners that can help you understand and make the most out of the point-of-sale.

Gregory Holmes is senior vice president of enterprise customer development for Greenwood Village, Colo.-based First Data Corp., a leader in merchant transaction processing.

# posted by Medical Information : 2:19 AM