Tabbedout’s new CEO wants to grow the company’s dining mobile-payment application by signing up more point-of-sale vendors and in turn more partner merchants.

The company, previously called ATX Innovation, Inc., launched the application in January 2010, and it is available for free download for Apple Inc. iPhones and devices that use Google Inc.’s Android operating system.

Named to lead Tabbedout on Jan. 30, Paul Fiore knows well both the payments and bar/restaurant industries. He replaces co-founder and executive vice president Rick Orr, who will continue to pursue international expansion, corporate development initiatives, vendor relationships and major account sales.

Fiore has held executive positions with Green Dot Corp., XP Systems and AT&T Employees Federal Credit Union. He also was co-founder and CEO of banking software provider Digital Insight, which Intuit Inc. purchased for $1.35 billion in 2007.

Fiore says he accepted Tabbedout’s offer for one main reason. “Maybe once every 20 to 30 years an opportunity to revolutionize the industry comes along,” he tells PaymentsSource. “The Internet was the last one, and I believe personally that mobile payments is the next.”

The 47-year-old invested in the film industry in recent years, receiving an executive producer credit for a 2005 feature film starring Ryan Reynolds titled “Waiting,” a story about a waiter, a lifestyle Fiore delved into while living with a brother who worked for a restaurant chain.

It is a neat coincidence then that Fiore’s previous vocations and avocations merge in Tabbedout.

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.

Users download the app, enter their payment information, and open a tab when visiting a merchant that partners with a Tabbedout POS vendor. They can pay, leave a tip and leave without waiting for the server to bring a bill or having to swipe a card because the stored payment information is shared with the merchant (see story).

Austin, Texas-based 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. Fiore describes those vendors’ market coverage as 70% of the 400,000 hospitality venues in which individuals can open a tab. Some 400 merchants in 32 states accept payments through Tabbedout’s app.

“The plan is to completely cover the market,” Fiore says. “The next steps for strategy are to continue where we already have strength, which is relationships with the POS vendors; handle internal growth; and continue to work through the exact revenue model.”

The company started with a consumer-based revenue model, charging 99 cents per transaction. It changed to its current merchant fee-based model, in which merchants’ fees differ depending on POS system used.

Tabbedout’s protects against theft and fraud by storing card information on the users’ phones; the information is encrypted and the card number is not displayed. The payment information is only sent to the POS system where users open a tab. The information is verified when the tab is opened, guaranteeing the merchant payment.

Tabbedout is exploring other services, such as its Tabbedout Offers, which is in beta testing in Austin. In that test, users may opt in to receive special offers and discounts, which display when they open a tab.

“The goal this year is to go from a couple POS vendors to many and to go from hundreds of venues to several thousand,” Fiore says, noting growth will be consumer-driven. “Based on consumer convenience, merchants are happy to do it, and eventually they’re going to see the economic benefit and the fact the server goes to the table three less times (by not having) to present the check, collect the card and bring back the processed transaction.”

The past year has seen other companies offer fraud protection and convenience to restaurant customers. VeriFone Systems Inc. and Micros Systems Inc. teamed to provide contactless at-the-table payment using near field communication equipped smartphones (see story).

Viableware created the Rail, an at-the-table payment system that allows for cash or credit payments as well as letting diners split tabs (see story).

Tabbedout differs for those two in that the customer does not have to wait for a mobile device to get to the table for card-swiping.

Tabbedout is addressing a market that is typically prone to a lot of fraud, Brian Riley, senior analyst and researcher for Needham, Mass.-based TowerGroup tells PaymentsSource. “The hospitality industry is the source for about 40% of merchant fraud,” he says. “So pay-at-the-table service has become prominent.”

Tabbedout is interesting because “it hits on one of the important fraud hot spots, which are the card-present-but-card-absent situations,” Riley says.

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