Mobile payments are nothing new; I’ve written about them several times over the years, but I had never used them. I didn’t think my iPhone supported them since it doesn’t have chip technology, but last week I learned about an app that lets anyone with an iPhone or Android pay with their phone.
The app is called Tabbedout, and it uses your existing phone signal to process payments at participating merchants.
Tabbedout was created in 2009 by a company here in Austin, and currently around 65 local bars and restaurants accept payments through it. It has expanded to Portland and Seattle, and Houston and Dallas are the next big markets. It turns out that my old college roommate works for them, so last week, she took me to a few bars in Austin to show me how it works.
The app is free for consumers to download and use, and establishments don’t pay a commission on transactions — they only pay for the program to be installed on their system. They just launched a new deal feature the other day that wasn’t even available yet when I used it, which allows you to access deals at select merchants when you use Tabbedout there.
Here’s how it works:
1) Download the free app. Set it up with your preferred credit or debit card, which is encrypted and stored on our phone — not their servers.
2) Click the Places button to see a list of nearby businesses based on your location that accept Tabbedout, and select where you want to open a tab. With the latest release, you will see a red dollar sign next to businesses that have deals through Tabbedout, such as $5 off a tab of $7 or more.
3) Click the button to open your tab. Their system will show that a tab has been opened. The app will give you a one-use code to present to the bartender, and they connect that account with you. Throughout the night, they’ll add your purchases to your tab.
4) You can close the tab while you’re still at the business, or you can do it later if you’re bar hopping and might come back, or even once you’re home. When you go to close your tab, you can use the card you’ve already added or choose a different one. Pick your tip (most places have a minimum, like $1 or 10%). Close the tab, and you’re done! You can opt to have the receipt emailed to you.
One of the best benefits is that you never hand your credit card over to a stranger, and there is no risk of accidentally leaving it behind. Those are two excellent ways to ward off identity theft.
It also prevents the major frustration of waiting in line to close a tab on a busy night when you’re so ready to go home — you just close it from your phone when you’re ready. You’ll also receive a reminder to close your tab 30 minutes before the bar closes if you haven’t already. If your phone dies or you forget to close your tab, it will be closed for you when the bar shuts down, with the minimum tip automatically added.
The first bar we went to was Kung Fu Saloon, and the bartender told me he thought Tabbedout was a great product because in addition to benefiting the customers, it saves him time. The bartenders don’t have to swipe a card every time someone buys a drink or wants to close their tab, so they can attend to more customers in less time.
Testimonials from businesses on Tabbedout’s website show that it’s been helpful for local businesses. Bob Hogan, owner of Paradise Cafe in Austin, says, “Since launching we’ve seen a significant increase in sales and our customers love it!”
We went to the next bar, Dogwood, and I opened up a tab there. I was amazed how quickly it worked now that I knew what I was doing. A red number at the bottom of the app indicated that I now had two tabs open.
When you’re done, you must close each tab separately, but that gives you the
opportunity to pay with a different card if you want to. Say you’re at a
dinner with clients where you can pay with your company credit card,
but then you head over to a bar and have to pay your bill yourself. You
can have several cards stored and use the ones you want for each tab (though I used the same card for both):
Not only is this app perfect for a busy weekend night when you want to leave a bar without pushing and shoving in line, but it seems ideal for restaurants where waiters tend to take a long time to handle the bill. My friend pointed out that it’s also optimal for bars that host trivia nights or other similar events, when everyone is trying to close their tab and leave at the same time.
In Seattle, a local theater called Central Cinema accepts Tabbedout. It serves beer and wine, and my friend said that both customers and the waiters love the app because it reduces the waiters’ trips to the seats, making them less obtrusive as the movie is playing.
Other cool features:
- Once you close your tab, a feature called CabbedOut pops up, which gives you the numbers of local taxi companies.
- You can opt to have your receipt automatically emailed to you, but you can also manually do it. Say you’re taking a client out to dinner. You can have the receipt emailed to your boss through the app.
- If you are worried your phone might get stolen, you can set up a Tabbedout password that pops up periodically so that nobody can use your phone to open up a tab.
I can’t believe I didn’t know this technology existed. The downside is that it only works at participating businesses, but I hope that it continues to take off so that I can use it more often, especially now that it features many local deals. I’m a convert!