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TheStreet Open House

Is The Starbucks App the Final Push For Restaurant Mobile Payments?

Stocks in this article: AAPL SBUX OPEN GOOG

Through Dash's app users can check-in, view, split and pay their tab from their smartphone at restaurants, bars and clubs. Dash integrates directly with a bar or restaurant's point-of-sale system on the back end.

Spirin and co-founder and CEO Jeff McGregor started the Brooklyn-based company in 2011, but only launched their iPhone app this past November. In contrast, Dash announced it launched an app for Android phones earlier this week.

While only 55 establishments have so far signed on to use the "Pay With Dash" app, with just 15 of those at present active, including Manhattan's Agave, City Crab and Barramundi, the company wants to overhaul "the traditional restaurant payment process to streamline a solution that allowed groups of friends to pay for restaurant bills and bar tabs seamlessly via their smartphones" and is targeting 21- to 35-year-old consumers.

"For them it's really important to hit the trendy downtown, Lower East Side [restaurants] and higher volume sports bars," McGregor says. "As long as we're capturing the right places, it's more important than just the density like 100-200 places on board."

Dash announced last week that it received $1.2 million in additional seed funding, bringing its total seed fundraise to $1.9 million. The investment will help fuel growth in two markets - Manhattan where the company presently is, and in Chicago, where it's planning to launch later this year.

However what the founders did share was interesting. Dash users, on average, tipped higher -- at 24% of the bill than the standard 18% or even 20%.

Why is that? Because they had a better experience at the establishment, which relates to how easy it was to pay, McGregor noted. "What we're seeing is that people are spending more and tipping more" with the app, McGregor said. "The dance at the end of the meal [waiting for the bill and then figuring out the tip and who owes what] ... if it's easier for the consumer to check out, they overall have a better experience and we make it really easy."

But this also speaks to the future of the burgeoning niche. Is there room for all? Dash's McGregor says yes, however, Egerman says no.

"Payment networks are winner-take-all markets," Egerman stated. "Once customers are used to paying a certain way they're not going to have 10 different apps on their phone. In order for this product to succeed you need to be near ubiquity otherwise consumers just won't bother."

 --Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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