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RS supplement multi-channel payments 24 RS February - March 2013 For retailers mobile has long been the means of bridging the gap between the online and offline worlds when it comes to shopping and browsing. Now, with the introduction of e-wallets from the likes of Google and Visa, mobile is facilitating multi-channel payments too. Wayne Tuckfield writes When you reach into your pocket and pull out your wallet, you might even surprise yourself to see just how much is hidden away there – not just your cash, debit and credit cards, but your store loyalty cards, transport cards, gift cards, vouchers, drivers’ licence – and that’s just a start. But an increasing number of companies are aiming to make the need for a physical wallet obsolete, turning the mobile phone in your other pocket into everything you need day-to-day. “It started with just a card being put onto your phone, so shoppers could just tap their phone to make a payment,” says Dan Soffer, vice-president of business development at VeriFone EMEA. “Very early on all of the players involved realised simply using a phone as a contactless card was not a compelling technology for consumers – so now everyone is trying to get as much as they can into their e-wallets. What’s in your wallet? “In addition to your cards, we are seeing loyalty schemes, offers and vouchers, gift cards, transport cards and restaurant tickets being added – replacing everything you see in your physical wallet. “You will see e-wallet providers trying to enable Oyster in their phones, because this is a consumer technology and if it’s compelling enough and solves a problem for consumers then they will accept it. The number of e-wallets on the market is increasing all the time, and involves partnerships between various groups offering different services all coming together to turn your phone into a one-stop shop for payments. Phil Rothwell, of systems vendor Sellerdeck, highlights the work of two major players in the field, Google Wallet and PayPal: “Google’s partnerships are pretty much the minimum it needs to develop a global payments service – Citibank is the acquirer, MasterCard is the payment system and First Data provides the infrastructure. Conceptually, what Google is doing is turning your smartphone into a kind of payment terminal. The good thing about it is that it makes the payment/credit card obsolete. “On the downside, what’s missing is the e-commerce/retail systems integration, which you need to make the mutli-channel experience seamless. This is something that PayPal is far better placed to deliver, as it has the transactional solutions in-house and its payments system is integrated into millions of merchant applications.”
However, he does reveal doubts over the potential of e-wallets, even for the major players. “The task of changing consumer behaviours that have existed in western economies for decades isn’t trivial,” he notes. “Over the last 15 years, the story of mobile payments has been one false start after another. The logic has generally been sound, the technology merchantable, it’s just the public who’ve found it hard to embrace the idea of using a mobile phone to make payments.” Queue busting Others, on the other hand, are much more positive about the potential benefits for retailers. Ben Gale, regional vice president western Europe at NCR, observes: “The number of people using them is still in its infancy, but it’s about changing the way people experience the world of interaction so it adds value to them – and only then will users vote with their feet, or rather fingers, and start using mobile wallets. “A consumer may start a transaction in one channel, at home on the internet, and can update that on their mobile, before completing the purchase in a store or on the internet, nearby on a phone or in store on a tablet or self-service kiosk. “This allows you to do a lot of queue-busting. “If a consumer is looking at something while logged into their account, if they come near the store maybe the store should recognise that and send something to them, like a voucher drop into their e-wallet with a QR code. “That encourages them back into the store and then they can pay using PayPal or a card.” As well as sending vouchers or coupons straight into a consumer’s ‘wallet’, retailers will also be able to promote brand loyalty with digital loyalty cards. According to Justin Fraser, sales and marketing director for Europe at SecureTrading: “At the most basic form, merchants can run campaigns. So when driving loyalty PayPal can work with merchants on marketing campaigns using their service and offer discounts or to accrue loyalty points whenever PayPal is used. “From a merchant’s perspective, they have access to e-wallet consumer base. You can have a logo on your website that will come up on Google and may be seen as a more trustworthy site, which means you are more likely to be used regularly and have customers spend more money. “People have learned that taking a card or cash from their wallet to make a payment. This is an evolution, not a revolution, especially as we have a younger generation growing up in a more cashless environment.” If e-wallets do take off and attract consumers in the way many believe it will, it will have huge implications for retailers, both in the way they work, the way they collate data and the technology and software they may need to adopt. SellerDeck’s Rothwell says new bits of hardware are already available that handle contactless payments and the biggest changes will be to the software. multi-channel payments supplement “Over the coming years we’ll see more development designed to optimise the capture of customer records and its subsequent analysis,” he adds. “Currently, this is only available in larger retail operations, who have the clout to operate loyalty cards, but gradually, companies like my own, SellerDeck, will make this available at the bottom end of the market. “In the UK we are a long way from the time when supporting mobile payments is absolutely essential. However, as we have seen all too clearly in recent months, survival on the High Street now depends on how well your online and in-store businesses work together. Whether you like it or not mobile payments is going to become a factor in this equation, building an understanding of the value it can deliver is essential for plotting future strategy.” However, some feel the need for retailers to embrace e-wallets and mobile payments is far more urgent, such as Martin Smethurst, general manager of retail, UK and Ireland, for Wincor Nixdorf – who launched their own ‘Wincor Wallet’ this year. “Over the next 12 months we will be inundated with ewallets, like we are with credit cards. Customers may be confused and end up with lots of them,” he comments. “It seems a no-brainer that people will want to be in and out of stores quickly so the convenience of contactless makes me surprised it hasn’t taken off already. “Everyone will have an e-wallet, and then it will be driven by the consumer who will determine which ones survive and which ones don’t. People are already happy to use Google Wallet or PayPal on the internet, I don’t think it’s a huge leap of faith for use it on the High Street. I think it will start slowly but within three years it will be very prevalent.” So if the next 12 months to three years is going to see such a change is shopping attitudes, what do retailers have to do to be ready? NCR’s Gale believes you must get your technology right so you can be an attractive proposition for customers. “Retail is consumer-to-business now, not business-toconsumer,” he observes. “They tell you how they want to buy and pay, so you have to look at the consumer and see what the trends are. Today’s students will be trained on iPads and have technology we never had, and as their consumer power increases those who recognise and cater for that will be the ones who win. “I think e-wallets will thrive in the future and how quickly will come down to people like ourselves creating value for consumers.” But it isn’t just accepting payments in-store to think about – if mobiles are going to contain e-wallets, then consumers have to be able to use them, and if you lack WiFi, 3G or 4G coverage, frustrated buyers may head elsewhere. NCR, Gale says, have looked to tackle that in Dartford Town Centre, where they have installed WiFi on every CCTV camera in the area, guaranteeing coverage when and where it is needed, with no blackspots. RS February - March 2013 RS 25
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