Jun 27, 2008At one of its Hawaiian properties, luxury hotel chain Outrigger Enterprises Group is piloting an RFID-based cashless payment system known as AlohaPay, provided by startup software developer Enrich Systems. AlohaPay allows a hotel to provide its guests with a contactless plastic card they can use like a credit card to pay for purchases both in and outside of the hotel property, as well to access guest rooms with RFID-enabled locks.
Outrigger guest rooms, however, have locks that work with magnetic-stripe cards. Therefore, says Alan M. White, the hotel chain's senior VP and chief information officer, AlohaPay is providing Outrigger with cards containing both an RFID chip and a mag stripe, making it possible for guests to use a single card to pay for purchases and open their room door.
Initially, the company is trialing the system at Outrigger Waikiki on the Beach, by offering the RFID-enabled card to select guests. The hotel's restaurant is employing a handheld RFID interrogator to capture a card's unique ID number, enabling guests to pay for a meal. In early July, White says, he intends to have the first outside retail establishment using the system, while another 13 retailers have agreed to participate as the system is gradually deployed this year.
According to White, the Outrigger has, in the past, made payment arrangements with some participating retailers allowing guests to make purchases at those locations, then pay for them at the hotel upon checking out. However, he notes, that scenario required a unique arrangement and point-of-sale (POS) connection between the hotel and each retailer. About two years ago, White says, he began envisioning a plan to tie all local retailers into the hotel, and to make purchasing easier for guests who might not carry large amounts of cash or credit cards with them as they walk, for instance, from their room to the beach.
White says he approached Microsoft, which connected him to local RFID technology vendor Enrich Systems. "I wasn't looking for RFID specifically," he says. "I was looking for a solution to a business problem"—namely, how to provide guests with greater convenience while shopping and dining in and around the hotel. The resulting system incorporates an NXP Semiconductors passive HF Mifare Ultralite RFID chip complying with the ISO 14443A standard, embedded in a mag-stripe guest room-key card, as well as software and a server provided by Enrich Systems on the Microsoft BizTalk Server 2006 RF platform, using Microsoft SQL Server 2005.
Enrich Systems was formed in 2006, says Elizabeth Redding, the startup company's chief technology officer, and developed this product as a result of Outrigger's request. Enrich Systems, she says, designed the system to allow a retailer to utilize a wireless device in its store to transmit a customer's ID number to an Enrich Systems server, which then sends the data to the hotel for approval.
Upon arrival at the hotel, a guest is given the option of using the RFID cashless card in participating merchant locations, as well as within the hotel. If he agrees, the guest provides his credit card to the hotel, and the card's number is linked, in the hotel's back-end system, to the card's unique tag ID number. The guest can set up specific perimeters, such as allowing only a specific amount to be charged on the card—if, for example, the card were given to a child.
Participating retailers will employ an Enrich Systems wireless POS interrogator to capture the card's unique ID number at the time of purchase. The device sends data to the Enrich Systems server via a Sprint wireless broadband connection, which confirms the unique RFID number and forwards the data to the hotel server, where the purchase can be approved. The approval is sent back to the POS device, which then completes the transaction, and the individual's account is modified to show the purchase on the hotel server.
At the end of the guest's stay, the total number of purchases is tallied using the SQL software, and that person then pays once for the total amount on his or her credit card. The retailer pays an initial fee to lease the device, then only a transaction fee thereafter. The cost of the lease is low, though Redding declines to reveal the exact amount. "It's enough to give them incentive not to let it walk away," she says.
For retailers, Redding says, there are several advantages to the system. The transaction fee they pay for AlohaPay is smaller than what they would pay to a credit card company, she notes. The system also encourages more purchases from hotel guests. For hotels, the advantage lies in allowing guests the convenience of shopping without a wallet. "For guests," she adds, "there is greater flexibility. They can walk to the beach, walk down the boardwalk, without bringing cash or a credit card."
"Eventually," White states, "this service will be one of those advantages that guests expect from a hotel." Thus far, he claims, hotel restaurant sales have increased since guests began using the AlohaPay system in that location.
Outrigger hopes to launch a full deployment of participating retailers by September of this year, Redding says, and other hotel companies in Las Vegas and South Beach, Fla., are also considering the system. The technology will be useful in any resort environment, she adds, including hotels that rent out kayaks, bikes, boats and other equipment for adventure sports, or accommodations located in wine country, where the cards could be used at wine tastings.
