FEED lets restaurant-goers pay check by cell phone

BOULDER – The next time you’re eating out see if you can use your cell phone to pay the tab. As if texting, watching TV, surfing the net and listening to music aren’t enough tasks for your cell phone, now you can buy your lunch with it.

FEED Tribes, a Boulder-based company that started in June, has created the service, called FEED, which lets diners pay for their food with their cell phone. It’s kind of like a gift card, but it can be used at any retailer that accepts the service. The service can also be used with a BlackBerry.

It works like this. You enter a restaurant, place your order and text message a personal identification number to FEED Tribes. In a few seconds, FEED Tribes sends you a four-digit code needed to complete the transaction. Feed Tribes transfers money from your account to the merchant. That’s it – no cash, no credit card, no check.

The code can be used only once and is good for 15 minutes, a safety feature for those who tend to lose their cell phone. The code expires and can’t be debited against an account. Plus, company officials say each FEED transaction must pass “several levels of authentication” before a transaction code is issued.

Users can put up to $500 in their accounts. And an automatic recharge feature lets users set parameters to always keep funds in their account. For example, a user can specify that if his account goes below $20, it can automatically be recharged to $200.

Rod Stambaugh, the company’s chief executive officer, says FEED helps consumers stay in control of their finances because every time they pay for something, their cell phone displays an up-to-the-minute account balance. FEED was initially developed to give high school and college students (often debt-ridden) an easy way to pay their favorite retailers while keeping an eye on their finances.

Stambaugh says his target consumer market is the 16- to 30-year-olds.

The service has merchant benefits as well. Accepting cell phone payment costs less than credit card transactions. FEED Tribes charges a flat rate per transaction. Stambaugh said on a $10 credit card transaction, merchants pay about 50 cents. With FEED, they pay a flat 19 cents.

“Merchants like it,” he says. “We did a pilot at San Jose State University and got good feedback from consumers and retailers.”

Merchants can interact with their customers via text messages or e-mails, and promote sales by giving FEED users who are waiting in line special and exclusive discounts.

Stambaugh says having the cell phone at the point of sale allows merchants to build interactive loyalty with their customers.

Broomfield-based restaurant Noodles & Co. became the first national chain to adopt the new service. Noodles is offering the service at all three Boulder locations. Other merchants offering FEED are Mediterranean CafÇ at FlatIron Crossing, Gizzi’s Coffee in Broomfield, Jamaica Juice at Writer Square in Denver and D’Corazon also in downtown Denver. It also has service in the San Francisco Bay area.

Positive feedback has caused Noodles to consider expanding FEED to its restaurants nationwide. “When people pay with credit cards, there’s no way to establish a dialogue,” says Chad Gretzema, director of marketing and communications for Noodles.

Gretzema says FEED Tribes gives Noodles staff the chance to communicate with customers, not just about payment, but about the company. Noodles is using the service to develop reward, affinity and loyalty programs.
“When regular guests opt in, we can speak to them right when they are making their lunch or dinner decisions,” he says. “We can reward free meals, communicate about events or introduce new customers to our restaurants by loading their accounts with dollars that can only be used at Noodles & Co.”

Stambaugh says the cell phone is becoming “the dominant communication medium” for voice, text and even video.

He has a point. The Cellular Telecommunications Industry Association has reported that this past June, cell phone users sent 12.5 billion text messages, up 71 percent from 7.3 billion from June 2005.

“Our system allows our partners to target their marketing dollars where they are most effective both from a medium and target audience perspective,” Stambaugh says. “You may not read the newspaper or look at a billboard, but you will definitely use your mobile phone each day.”

The company plans to launch a campaign in the beginning of January 2007 to reach more retailers and consumers. Stambaugh wouldn’t share specific goals, but said as of December 2006, FEED Tribes had fewer than 50 retailers onboard and about 300 consumers signed up.

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