Swedish bar lets patrons pay via mobile phone

Swedish bar lets patrons pay via mobile phone
A bar in Uppsala in eastern Sweden recently launched a new service that lets mobile phone-toting bar patrons leave their wallets at home. But not everyone is toasting this new taproom technology, contributor Oliver Gee discovers.

A visit into the Kalas bar in Uppsala starts off like a visit to any other pub. The customer strolls up to the bar and places an order with the bartender.

But unlike most drinking establishments, customers at Kalas need not reach for their wallet to spur the barkeep to action. Rather, Kalas offers an arguably faster and more secure alternative which is attracting attention, criticism – and customers.

Rather than handing over a credit card or plunking down a wad of cash, customers at Kalas simply grab their mobile phones.

The technology works like this: the customer sends a text message corresponding to the relevant drink code from the menu and Kalas instantly responds with a return text message.

When shown to the Kalas bartender, the message serves as a drink request as well as confirmation of payment.

The drink is served within seconds and there's no need to wait for change and a receipt, as the drink charges show up later on customer's phone bill.

Of course, the service comes with a hefty surcharge of up to 25 percent, causing consumer advocates to cry foul.

"Why would anyone want to pay a higher price?" asks Ragnar Lindström of Konsument Uppsala, a consumer advisory service operated by Uppsala municipality.

Not only does Lindström take issue with the service's higher costs, but he also warns that customers with financial difficulties may exacerbate their problems by heading to the bar and paying with their mobile phone.

Obtaining credit on one's mobile phone through so-called "SMS loans" has been a growing phenomenon in Sweden in recent years, putting many people in difficult financial straits.

Last year alone, over 28,000 cases of unpaid SMS loans ended up at the Swedish Enforcement Administration (Kronofogden). While the figure marks a reduction from years past, a surge in the number of people using phones to settle their bar tabs presents a new class of financial risk.

"People will be able to use it even if they have no cash and no money in their account," says Lindström.

"They shouldn't be drinking on credit."

But the head of SMSdrink, the company behind the technology, has anticipated such criticism.

"Of course we have considered this," SMSdrink CEO Mats Wängelin says in response to concerns about customers using their phones to pay for drinks with money they don't really have.

"It is not our goal to trick people into making stupid decisions. We have moral values."

Wängelin explains that the service includes a 200 kronor ($30) per-purchase limit and that customers can't spend more than 1500 kronor per month buying drinks via text messages.

"You won't go bankrupt," he claims.

Wängelin likens criticism of his company to an attempt to blame credit card companies for people's spending habits during a night on the town.

"Call MasterCard and ask them what they're doing to prevent overspending in nightclubs. They will laugh their lips off!" he quips.

He adds that SMSdrink is continually working to reduce its surcharges, with the goal of bringing it down to 12 percent by April of this year.

Besides, says Wängelin, the additional fees go to the phone company, not SMSdrink.

Back at Kalas, bartenders say that the roughly 10 percent of customers who have tried the new system represent a wide cross-section of the bar's clientele.

Many are patrons who don't want to wait or are looking to try something new. And of course, customers who find themselves short on cash have also been keen to pull out their phone to pay for one more round.

According to the bar's owner, response has been "overwhelmingly positive", with patrons citing the service's of ease of use as one of the main attractions.

He laughs off claims of people spending money they don't have.

"It's a matter of discipline. With SMS loans available in Sweden, buying a beer on credit isn't the biggest thing worry about," he says.

Indeed, Wängelin is bullish about the future of mobile phone-based payments in bars and elsewhere.

"We aim to expand to other bars before summer, and slowly into restaurants, cafes, even taxis," he explains.

"The launch in Kalas is the spark for the plan to make SMS payment available for all of life's smaller purchases. Money will become a thing of the past. The wallet of the future will be the mobile phone."

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