In 1993 Burger King began accepting credit cards for payment of fast-food garnering media coverage of this fundamentally new use case, which resurfaced on TikTok last year. Customers’ reactions recorded from the momentous event, while funny to watch today, were initially speculative as to whether paying by credit card for small purchases would catch on and if it would really be quicker vs cash or make waiting in line any shorter.
During the 1990s credit card use exploded with over three quarters of consumers having at least one or more credit cards, growing from just one fifth of families in the 1970s. Burger King was on to something.
Fast forward to 2024. Restaurant brands are once again in a unique position to revolutionize the customer experience -- now with digital wallets. As 90% of Americans have a smartphone and 85% already say they know about digital wallets brands can capitalize on the routine behavior of most of their customers. Every day consumers walk around with their mobile devices in hand watching videos, messaging, getting directions, gaming and most importantly -- purchasing.
This could not come at a better time.
The restaurant industry has suffered a tough four years and is still finding its footing in the aftermath of COVID and inflation. As a result, it has also felt the pinch of untapped potential from loyalty programs. While rewards programs are a powerful draw for customers (56% of them are likelier to buy from brands offering loyalty programs), there's a disconnect in how often these rewards are actually used.
A Salesforce study reveals that only 36% of customers redeem their rewards more than once a month. Moreso, a large number of guests remain untapped and unknown to a brand having not been acquired into their rewards program and resulting in a loss of valuable first party data collection.
So, what's holding customers back? The answer lies in the friction points along their journey. Today's consumers are hungry for seamless experiences that provide convenience with personalization. They want loyalty programs that are not just rewarding but effortless to use.
The problem with the current approach to loyalty
Deloitte research highlights that the most crucial aspects of a successful loyalty program are simplicity, ease of use and the ability to earn and redeem financial rewards. Yet, many current programs struggle to deliver on these fronts, often due to fragmented systems, complex tech stacks and unsuccessful merging with payment processes.
This disconnect becomes even more apparent in today's digital age, where customers have come to expect a seamless checkout experience from their phones. They want the convenience of mobile payments coupled with the benefits of loyalty programs — but the reality often falls short of this ideal.
Many loyalty programs require multiple steps to engage, earn and redeem rewards — steps that are separate from the payment process. This frustrates guests by creating a cumbersome experience that contradicts the very purpose of loyalty programs: to enhance customer satisfaction and encourage repeat visits.
When customers have to juggle between apps, loyalty cards and payment methods, it creates unnecessary friction, leading to slower service times, longer lines and a negative impact on the overall experience. For busy restaurants that rely on speed and efficiency, these delays can be particularly problematic.
What restaurants need is a new strategic solution that blends consumerism and technology to reach and engage busy customers in a familiar way.
The solution? Merging payments and loyalty
Enter the next evolution of loyalty: the merger of payments and rewards. This innovative approach isn't just about simplifying transactions — it’s about creating a frictionless path from purchase to reward that keeps customers coming back. The blend of payments and loyalty will revolutionize how restaurants engage with their guests, turning casual diners into loyal brand advocates.
This approach aligns perfectly with current consumer trends, as experts predict that digital wallets will overtake plastic cards by 2030. Plus, already, 53% of people use digital wallets more frequently than traditional payment methods.
With the native integration of loyalty and payments, restaurants can address multiple pain points simultaneously and deliver loyalty in a new way. For instance, this integration removes friction and adds convenience to the customer experience. Guests can pay, earn, and redeem rewards in a single transaction, streamlining and enhancing their checkout process. More importantly, it provides a convenient option for those who prefer not to download a separate app, delivering an app-less loyalty experience.
Furthermore, an integrated system makes loyalty programs more accessible, driving both acquisition and retention. This out-of-app solution allows brands to reach customers who prefer using digital wallets. Customers can be prompted to enroll in the loyalty program directly from their mobile device when they pay, without needing to download a separate app or carry a physical card.
This approach encourages repeat purchases as customers can effortlessly accumulate and redeem rewards while using their preferred digital payment method through their digital wallet. By engaging customers who might otherwise avoid downloading another app, brands can significantly broaden their loyalty program's reach and dramatically shift a large number of unknown guests into known loyalists.
For those who do opt for a brand’s in-app experience, integrated payments and loyalty offer even more advanced features. Users can benefit from stored payment methods, including credit cards and gift cards, which can be set to automatically reload. This ability also simplifies subscription management, allowing for automatic renewals without the need for manual intervention. These enhanced capabilities streamline transactions while also open up new avenues for personalized offers and seamless upselling.
Pairing loyalty with payments also helps brands better understand their customers. Capturing data on both transactions and loyalty engagement in one system helps restaurants gain deeper insights into customer behavior, preferences, and spending patterns. This valuable information can inform personalized marketing strategies and menu optimization, making the demand for seamless, integrated technology more critical than ever.
Punchh Wallet by PAR meets this need as customers using its integrated technology see a 163% increase in customer lifetime value, a 6.5x lift in customer frequency and a 70% increase in loyalty program sign-ups from guests using Apple Pay®.
Merging loyalty and payments is a tactical imperative that directly correlates with consumers’ daily habits. Marketers are in the perfect position to be a Kingmaker for their brand by transforming their loyalty programs into a powerful driver of customer engagement and revenue — all in one tap.
About Sal Nazir:
Sal Nazir is the General Manager of PAR Technology’s PAR Payments division. For over 20+ years, Sal has been a noteworthy leader in the payments space, including holding executive roles at TouchBistro, ADP, and Moneris Solutions. In his current role, he is accountable for driving the continued growth, expansion, and adoption of PAR Payment Solutions in North America. A graduate of York University, he enjoys speaking on panels and at conferences about payments, commerce, and technologies that benefit businesses and the customers they serve.
