March 8, 2012, 9:54 AM

Pay for a bar tab without opening a wallet

The Tabbedout mobile payments app now includes PayPal as an option.

Lead Photo

Consumers can choose an alternative payment in the app in addition to a credit or debit card to pay a tab.

PayPal, the payment arm of eBay Inc., continues to make inroads outside of e-commerce. It’s latest foray is as a payment option in the Tabbedout app for iPhone and Android smartphones.

The app, produced by ATX Innovation Inc., enables consumers to pay their tabs at more than 400 U.S. bars and restaurants without handing over a credit card or digging for cash. Consumers open a tab in the app at the bar they’re in. They do that by first selecting the bar and pressing the Open Tab button in the app.

They can view an updated total of their bill and select from a stored payment card, or PayPal as a new option, to settle the tab. To pay with PayPal, the user enters a phone number and personal identification number for his PayPal account. They also can include the tip and split the tab among other Tabbedout users on the same tab.

The merchant must use a point-of-sale system that supports Tabbedout. The three most popular ones are from Micros Systems Inc., Future POS Inc. and Dinerware Inc., a Tabbedout spokeswoman says. Tabbedout software in the POS system sends orders and their totals to an app user it identifies after establishing a connection. This helps consumers keep track of their tabs. When it comes time to pay the bill, the app sends the payment data stored in the consumer’s phone via an encrypted wireless connection to the POS system. From there, the POS system sends the transaction to the merchant’s payment processor for authorization. While the app is free for consumers, merchants pay an undisclosed fee.

Other features of the mobile commerce enable the consumer to create a unique pass-phrase to safeguard against unauthorized use should the smartphone be lost or stolen, to call a cab by pressing a button within the app and to e-mail a receipt.

The PayPal option currently only is available in Austin, TX, ATX Innovation’s headquarters. A high number of consumers with smartphones and the prevalence of venues that accept Tabbedout makes Austin a good test location, says Rick Orr, co-founder and executive vice president. He did not say when the PayPal option would appear in other cities. Orr also declined to disclose use data or average ticket value.

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