The way we make payments and use money was fundamentally changed forever when credit cards were introduced. Technology has been advancing quickly since then and it is now possible to imagine a world in which payments will be even more mobile, digital, and cashless. To keep up with shopper’s preferences when it comes to making payments, it is essential that retailers reconsider how they operate.
Rise and Evolution of Cards
In 2016, card expenditure accounted for 78% of retail sales. Especially in the grocery sector, where the number of transactions and total value of spend both increased steadily.
Contactless cards were introduced in the UK back in 2012 and proved to be a big hit, with shoppers enjoying the convenience that they bring to smaller payments and the reduced average time of transactions by 55%. Because of this, retailers that have contactless implemented in their stores have an overall advantage.
Self-service checkouts have become very popular over the last few years in the retail industry, especially in supermarkets. These checkouts not only cater to the needs of shoppers that want to get in and out of stores quickly, but they are operationally efficient for retailers.
In some stores, they have gone one step further and started including card-only terminals – a new approach to convenience retailing. These stores still have a way to go before they go fully mainstream as they currently only work in certain locations, with certain demographics and store concepts. Despite this they present a clear opportunity for retailers, with transactions being more secure and accurate and the efficiency of shoppers and staff being increased.
In August 2016 Waitrose became the first major supermarket to take this step into the completely cashless world and has five self-service checkouts in its store in Hounslow where customers can only pay by card or mobile device.
Cashless retailing is being encouraged by retailers by using new technology in many ways. Shoppers can now use their smartphone to tap-and-pay-in-store thanks to mobile wallets, which speeds up the shopping process. Research carried out by ShopperVista of over 2,000 British grocery shoppers, claim that 5% of shoppers are already using their mobile to scan and pay without going to the till, with another 43% expressing interest in doing this.
A convenience store in Sweden called Näraffär opened at the start of 2016 and is the first of its kind. It is a completely unmanned store that will never close and is only accessible through a smartphone ID app which opens the store doors only to registered customers. The app also works as a scanner to approve every purchase, with the shopper then getting invoiced.
Amazon are also getting involved, with the addition of new technology in its Amazon Go convenience stores. They will be checkout free and make use of ‘Just Walk Out’ technology.
7-Eleven are trialling ‘HandPay’ which is a system where there is no need for cash, card or smartphone to make payments instore. The system uses a biometric authentication method that identifies customers through palm scans. It works by using a 360-degree scanning technique that identifies the products being bought.
Cashless Retailing in the Future
It is expected that coins and notes will become a thing of the past and virtual payment opportunities will take their place in the future. Because of this, shoppers are spending less time instore, so developing new ways to keep them engaged is important for retailers and manufacturers to get right.
Numerous alternatives to traditional payment methods are being trialed by retailers all the time. Even though it may take time to get these new payment methods mainstream, it is clear to see from the success of mobile payments and contactless that it does happen. Retails need to begin thinking about new tools and devices, and how they may adapt checkout areas to ensure that they’re equipped with the latest technology.