Tabbedout, whose mobile application allows customers to pay a bar or restaurant tab using their phone, is boosting its attraction by adding PayPal as a payment option.

The two companies are launching the partnership at the South by Southwest Music Conference and Festival beginning March 9 in Austin, Texas. PayPal Inc. and Tabbedout will offer consumers incentives to try Tabbedout, which will feature its service at 16 bars and restaurants near the heart of the event that runs through March 18.

The merchants also will use Austin-based Tabbedout’s Offers platform to reward consumers, Rick Orr, Tabbedout executive vice president, tells PaymentsSource. For example, if a consumer runs up a tab to a certain minimum amount, PayPal will pay for a portion of the bill.

Consumers can download the free app from the Android Marketplace, and they may use it to preregister the card information they want to use when they pay for meals and drinks.

They now also may register their PayPal account information. When consumers choose PayPal, the app loads the hosted login screen for PayPal, Orr says. After the consumer enters the login information and hits submit to pay, Tabbedout sends a confirmation and pdf receipt to an e-mail account of the consumer’s choosing. The merchant’s PayPal account will show the payment.

“The merchants don’t have any additional overhead for supporting PayPal, but they get the benefit of another payment-acceptance type that their patrons want,” Orr says.

Users of the service can locate the closest Tabbedout merchant partner through the phone app’s geolocation service. Once they enter the venue, they open a tab using one of the cards they applied to the app. Tabbedout sends the card information to the merchant’s point-of-sale system so the merchant is protected should a consumer not close the bill. Orders accumulate on the tab, which the consumer can see immediately on their phone screen.

When users of the Tabbedout service are ready to leave, they add a tip; Tabbedout makes suggestions based on region for a minimum tip and a recommended tip. If consumers want to give less than the minimum tip suggested, the app prompts them to explain why so management can address the issue. After entering the tip, the consumer can leave after selecting the pay button in the app on his phone. The consumer also can change the payment method from the one with which they opened the tab if he decides to stay.

Besides providing fraud protection and convenience for customers, Tabbedout’s app reduces labor for waiters in restaurants, cutting down on their visits to diners’ tables.

Tabbedout is partnering with point-of-sale vendors Micros Systems Inc., Jumpware Inc., Dinerware Inc., Future POS Inc. and Focus POS Systems Inc. to offer the app’s features. The company describes those vendors’ market coverage as 70% of the 400,000 hospitality venues in which individuals can open a tab. Some 450 venues partner with Tabbedout.

A PayPal spokesperson declined to describe how the company’s payment option integrates with Tabbedout.

“We're excited to bring our 106 million PayPal users yet another opportunity to pay with PayPal and are equally thrilled to expand our merchant reach to Tabbedout's existing bar and restaurant partners,” the spokesperson says. “Kicking off first at 16 locations in the Austin area, we plan to work to expand our capabilities to more of Tabbedout's 400 locations across 34 states.”

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