WASHINGTON — The phrase “there’s an app for that” has revolutionized the way small businesses and corporations run.
So with the growing number of social media tools and mobile apps, Capital News Service took to the streets and interviewed a sample of food truck and coffee shop operators in the Washington, D.C. area to see how these new technologies are impacting businesses at ground level.
Generally, the business operators reported using Square for their credit card processing and a willingness to adapt to accepting Google Wallet and Apple Pay as they become more popular with the public. Overall, most owners said it was important for their business to keep up with technological changes to better serve their customers.
Here are the details of our findings:
Around lunch time, the streets of Washington are lined with food trucks offering everything from falafel to barbeque. The trucks are painted in a variety of colors, but one little sticker was consistent on almost every vehicle: a small square logo alongside the Visa and Mastercard stickers.
Square, a privately owned company founded in 2009, popularized mobile credit card readers for small and corporate businesses. Through a small square attachment, any person can turn their Smartphone into a business tool.
The company is also known for selling a stand for iPad users to convert their Apple product into a simple, lightweight, point-of-sale system.
“Buying and selling sound like simple things – and they should be. Somewhere along the way, they got complicated. We’re working hard to make commerce easy for everyone,” Square proclaims on its website.
The owners of food trucks DC Ballers and Carnivore BBQ were advocates for Square, citing its easy-to-use interface and fast deposits.
Saté food truck owner Martin Setiantoko has run his business for three years and although he uses a traditional wireless credit card reader, he admits that Square has made mobile credit card readers for the food truck community more mainstream because there is no longer a need to purchase a specific device for credit card processing.
Despite the popularity of Square among his fellow vendors, Setiantoko prefers to continue using his wireless credit card reader because the credit card processing fee is lower than the rate Square charges.
“Square is expensive… the rate [credit card processing fee] is up there,” said Setiantoko.
Traditional credit card readers charge users anywhere between 1-2.5 percent per swipe depending on the type of credit card and business. Square users pay a standard 2.75 percent for every swipe and 3.5 percent plus 15 cents for every manually entered transaction.
Michael Havtemariam, the DC Ballers food truck owner, said he would definitely switch to Apple Pay once more customers are familiar with the virtual wallet and show interest in using it.
Apple Pay charges a processing fee of 1.9 percent, which is .85 percentage points less than what Square charges.
Along with the usage of Square, social media has made a large impact on the food truck community. Washington truck owners commonly cited Twitter and Facebook as marketing platforms to advertise their food and location for the week.
“At least 40 to 50 percent [of customers] come from social media,” said Havtemariam.
Il-Horn Hann, co-founder of the Robert H. Smith School of Business Center for Digital Innovation, Technology and Strategy at the University of Maryland College Park, believes the potential for social media to affect small businesses is “very large.” But, he said there has yet to be any research that proves this.
Although social media is a useful tool for advertising and marketing, Hann said small businesses might not be using it to its fullest potential.
“The problem small businesses have is that they might not have the background to engage in social media in a consistent level that would make a difference in the long run,” he explained.
When asked whether Google Wallet and Apple Pay are the future of consumer spending transactions, Hann said, “We’re clearly marching in that direction.”
“People can now pay with their Smartwatches and that seems to be more convenient,” he added. “[However] it might take a long time before we adopt all that.”
Carnivore BBQ truck owner Steve Adelson said his food truck started as a restaurant in Owings Mills, Maryland but eventually left its brick and mortar restaurant for a food truck due to the lack of demand for BBQ in that location.
He said, “I liked what I created so I decided to bring it where people would appreciate it – in Washington, D.C.”
Carnivore BBQ sees an average of a 100 customers a day, depending on the location and weather, he said.
Adelson uses Twitter and a website to market his food truck. However, unlike the location in Owings Mills, D.C. food truck stops are well-known areas with heavy pedestrian traffic, according to the Carnivore BBQ owner.
Adelson said, “Unless you’re trying to create a new location, it has become less social media oriented.”
The Starbucks app was the first successful widespread mobile payment app. According to a Starbucks media relations representative, there are over 14 million active users and over 8 million transactions processed using the app per week in the United States.
“Eighteen percent of all in-store transactions in the nation are made using the Starbucks Mobile App,” said a Starbucks media relations representative.
But what about Starbucks’ small, local competitors?
Michael Haft and Harrison Suarez, co-founders of Compass Coffee in Northwest Washington, said technology is a key factor for small businesses like theirs.
“We definitely need to stay on the cutting edge of technology,” said Haft, adding that small businesses have an advantage in keeping up with changing technology.
“We’re more flexible,” he said. “We don’t have a long bureaucratic chain of decision makers.”
Compass Coffee will begin accepting Apple Pay and Google Wallet transactions in the fall when most major credit cards are accepted through the mobile payment apps.
Google Wallet v. Apple Pay
Google Wallet took mobile payment to the next level when it was released for initial use in May 2011.
Instead of the QR code the Starbucks mobile app is centered around, which is similar to scanning the numeric bar code on an item purchased at a grocery store, Google Wallet makes use of near field communication (NFC), which allows users to simply tap their phones on any accepted NFC terminal to process payment.
Three years after Google Wallet was released, Apple initiated the release of its version of a virtual wallet, which expanded its previous Passbook app to a mobile payment app allowing users to add certain debit and credit cards.
Apple announced April 27 that Discover will support Apple Pay beginning in the fall. Visa, Mastercard and American Express were on board when the mobile payment app was introduced last October. Apple Pay also makes use of NFC terminals to process payments.