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Future of Retail — Payments Innovation


issue 02


and debit payment cards almost anywhere, they’re secure, small to carry around and reasonably robust. So if it’s not broke, then why try to fix it? The answer is friction. Marketers and


strategists will talk about creating a friction- less experience for the consumer – making it easy for the end user, which invariably means quicker. Over the last generation we have not seen the type of new inventions that occurred in previous generations, but instead we’ve seen an evolution with speed and convenience at its core – driven by an increasingly consumer focused society that demands immediacy – be that more powerful smartphones, faster internet speeds, or the ability to send money instantly around the world. So while the consumer has seen their


online retailing experience streamlined, such as one-click checkout, the bricks and mortar payment experience has changed little. While us Brits are supposed to be a nation


of queue lovers, I suspect our patience only extends to queuing as a pastime – not when it’s something important like trying to grab a bite during an increasingly short lunch break. I know in my quest for a morning coffee in London, I have certainly been prepared to move on to a different outlet if the queue is too long. It may seem that reducing payment time


seems pretty trivial, but the numbers do stack up – for the benefit of both customer and retailer. In a high footfall environment with an average serving time of 4min, then an overall reduction of 15-20 secs equates to an increase of around 7% in revenue. That’s not accounting for improved customer satisfaction. The question is how can that be achieved? Uber is hailed as having revolutionised the


taxi industry, and in particular its frictionless payment experience as the user can simply get out the car, with the payment (and tip) being made automatically. A zero touch payments experience. Many have attempted to implement alternatives to card payments, positioning


them as lower cost, greater benefit to the user, or quicker. With the growth of smartphones, it was no surprise that paying via mobile has been at the top of the list - we saw PayPal introduce an app in 2012 to allow users to pay in store, and numerous other smaller developers. We’ve also seen some more elaborate


options, ranging from biometrics, to facial recognition and geo-fencing: essentially recognising you as you walk in the door of a store, and allowing the assistant to take a payment from you while you’re in the store, without the need to reach for your phone, wallet or coins. But the single biggest barrier to adoption


of any of these has been integration with the legacy retail IT network – as a consumer, I’m highly unlikely to use an alternative payment method that only works in a specific store. Similarly, retailers don’t want to integrate


with new technology unless it brings with it the promise of increased consumer spending. Apple had the brand clout to influence


such a change, but while the consumer may not present a physical card, Apple Pay very much relies on the card rails. Without it, even Apple would have struggled to win consumer, retail and bank adoption. There are other selected instances


that show promise and the potential to breakthrough, such as MasterCard’s Qkr! – a digital app that allows users to pay at the table for their drinks or meal. But as only implemented in a handful of stores, it still represents little more than a pilot. In my opinion, the most successful recent


innovation within payments is that of NFC technology, or contactless payments. Although available in 2007, it’s only taken off with concerted promotion by Barclaycard, and Visa, active growth in the payment acquiring side by Visa and MasterCard, adoption by the high street banks and high profile uses such as the supermarkets, fast food restaurants, Apple Pay and Transport for London. Representing 18% of all card transactions,


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