Viableware wants to differentiate its restaurant payment system by targeting high-end establishments with technology that doesn't erase the personal interaction between patrons and staff.

Other emerging payments systems, focused on mainstream restaurants, introduce some degree of automation. For example, some companies let patrons pay from a mobile app instead of asking a server for the bill.

"We maintain the traditional relationship with the waiter. If anything, we are extending that," says Joe Snell, CEO of Viableware.

Viableware just closed in $6.5 million in Series B funding from investors including Swiftsure Capital in Seattle. The company has tested its Rail payment system in the Seattle area, and will use the new investment to extend its system to a national market, as well as fund sales and engineering.

Rail is a handheld device designed to replicate the look and feel of the leather folder that wait staff use to present bills at full-service restaurants. Rail automatically splits the bill, calculates the tip, and emails receipts to consumers. To pay, guests swipe their own card and retain possession of it throughout the entire transaction. P.F. Chang's, Dickie Brennan's and Ethan Stowell Restaurants are testing the system. These restaurants did not provide comment on Rail by deadline.

Rather than enabling consumers to pay remotely, Rail is designed to reduce paper and distraction for the wait staff.

"The waiter does the normal job of service and discussing the menu, etc., and brings the handheld device to the table," Snell says. "It's a different customer experience than other [digital payments] technology. It's more traditional, for places where the consumer expects to have a lot of interaction with the staff."

Rail tokenizes transactions, a security measure that obfuscates card on the merchant's end while allowing them to track payments to spot trends. Rail also surveys customers on service and experience, asking individuals two questions out of a larger set of 20. It then aggregates the answers. In tests, this method has a 75% response rate for surveys, Snell says.

By keeping the wait staff involved, Rail runs counter to a trend of automating the dining experience.  

The Tabbedout application allows consumers to open a tab through their mobile phone and pay that tab without waiting for servers to bring the check. Snapfinger's product enables consumers to check-in, order and pay using their mobile phones.

Consumers who use MyCheck speak to wait staff to order, but pay through the MyCheck app instead of waiting for the server.

There are a number of other payment companies, including Square, that target restaurant payments with mobile apps and hardware.

These companies threaten to crowd the market, making specialization within the larger restaurant category a necessity, says James Wester, an analyst at IDC Financial Insights.

"Processing transactions is such a commodity, and there are so many companies coming out and testing solutions that are trying to squeeze what they can out of what is not a very profitable business unless you are handing a lot of volume," he says. "The margins are very small."

Focusing on a specific portion of an industry can also help a company gain expertise, says Rick Oglesby, a senior analyst with Aite Group.

"Merchants tend to care about their own little niche in the world, they don't get caught up in the next big trend in the nation," he says.

While there are a lot of payments companies in the restaurant market, there likely won't be an immediate shakeout, Oglesby says.

"[The overcrowded market theory] is true in the longer term, but right now we're in an early environment where there are a lot of solutions, and the more the merrier when you are trying out what's going to work and what's not going to work," he says.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry