Taking payment – how technology is changing the way we buy from retailers

The retail industry is no stranger to transformation. There was a time when a shopping trip took you to your local high street full of independent shops. Then came the arrival of the department stores. And after that, it was the huge out-of-town retail outlets and shopping centers. Then came the internet.

The change has been rapid and vast.

The continued and ever-evolving role of technology in today's retail landscape should not be understated.

Technology affects every part of the retail sphere; it has transformed distribution, advertising and access to what's for sale. Data-rich sites and analytical tools, including scraping technology (essentially tools that legitimately crawl through retailer sites and collate reams of data on products and pricing that can be translated into trends, tactics and success rates) have revolutionised retailer and supplier planning, production and sales strategies.

Technology has also triggered a payment revolution: ‘old-fashioned’ cash is making way for contactless, bitcoin, Apple Pay and cashless retail outlets. Many customers are keen to embrace this effortless new technology and retailers need to take note.

The rise of contactless

These new, tech-driven payment methods are certainly increasing in popularity. According to MarketsandMarkets, the contactless payment market is expected to reach around £5.2 billion this year.

This is clearly a significant sum of money – until you compare it with the UK’s total volume of payments. For example, Payment UK’s most recent UK Payment Markets report cites last year’s figure at £38.2 billion. Suddenly, that £5.2 billion seems like a dip in the ocean.

Fast-forward to 2021, and the contactless payment market will have reached almost £14 billion. Over the next five years the number of contactless cards and terminals will continue to rise – alongside the volume of mobile payment services.

Currently, most contactless payments are made on public transport or to buy food and drink, which is mainly a product of the current limits on the value of a transaction that can be fulfilled by means of contactless technology. More widespread adoption and for higher value transactions has stalled largely due to consumer and bank concerns about fraud.

A further contributing factor to its slow-down in adoption rates is due to retailers not adopting the technologies themselves. There is, after all, an investment cost involved in the move to contactless methods.

Apple Pay leads the way

Apple Pay has been around for two years and is currently dominating the mobile payments industry. Tech savvy customers (with iPhones) are simply waving their smartphones at scanners in order to pay for goods. And if they have an Apple Watch, they don’t even have to get their phone out.

The challenger: Android Pay

Then there’s Android Pay. Launched as a rival to Apple Pay, Google’s contactless smartphone payment system is using offers as an incentive to get more customers using the payment system. Free travel and coffee every Monday (a current offer for Londoners) sounds like a great way to get customers on board.

Bitcoin and cryptocurrencies

Also on the ever-growing list of payment services is bitcoin – the most well-known form of cryptocurrency. Developed and introduced anonymously, the secrecy surrounding bitcoin adds to its appeal. More and more companies including Dell, Expedia, PayPal and Microsoft are accepting bitcoin as a payment (by partnering with bitcoin processors).

Bitcoin uses blockchain technology – a technology that is so versatile it has the potential to revolutionise any industry. A poll by the European Payments Council (EPC) has revealed that 90% of respondents believe that blockchain technology will have a significant impact on payment solutions by 2025.

There are clear benefits of blockchain for the consumer – people can pay in real-time without the need for a middleman. Yet, the uptake is still relatively slow amongst retailers. This would change if there was an affordable payment terminal that accepted both bitcoin and traditional payments. Whoever comes up with a solution will be onto a winner.

The more these blockchain solutions are adopted, the more they could impact consumer purchasing behaviour. By keeping customers’ data more secure and in one place, we can expect to see a greater level of consumer trust in the technology as a whole.

And let’s be clear, no-one would put it past the likes of Facebook and Google to want to get ahead of the banks in terms of blockchain-driven payments and financial services. But more on that later...

Taking the online experience in-store

The ease of online, contactless and mobile payments is becoming the norm for customers. Retailers need to ensure that the in-store experience offers the same level of convenience and personalisation. As a result, physical retailers are employing online tactics to offer a more streamlined and personalised customer experience once someone enters a bricks and mortar retail store.

The modern shopper expects their online data to be available when they shop in-store; they want their straight-forward internet browsing experience to translate onto the shop floor. Unfortunately, retailers are losing millions of pounds in sales each year because their payment systems do not meet customers’ expectations. Online customer data must be integrated with offline data to ensure what starts as a carefree web browsing experience translates into an equally straightforward in-store transaction.

Could the shop window be next to change? The future may hold a conversion to smart glass, which will effectively act like a tablet screen, enabling customers to shop, select, organise delivery and pay for purchases in a matter of minutes from the street. This would open up the opportunities of out-of-hours store sales and bring a whole new meaning to the phrase 'window shopping'.

Technology to boost loyalty

Customer loyalty programmes have long been a part of elevating the retail experience. However, while customers often sign up to traditional loyalty programmes, the majority tend not to engage with their membership. Technology can change that.

For example, connecting personalised content and customers allows retailers to direct loyal fans to in-store promotions. Similarly, using geolocation technology can help retailers track customers throughout their retail journey, delivering rewards and promotions based on real-time in-store behaviour.

Not that retailers need to host their own payment solutions online to keep customers loyal – social media channels are more than capable of doing that for them. Sites such as Facebook, WhatsApp and Twitter are eager to become payment paths, combining the ease of online shopping with greater flexibility.

Consumers in the US have been transferring cash via Facebook Messenger and Snapchat for some time now. Facebook in particular has been clear about its desire to push Messenger into the realms of ecommerce and users in the US will soon be able to link between their PayPal and Messenger accounts.

With the relaxation of EU laws governing digital payment services in the UK, it won’t be long before we see a wider range of social media payments heading across the pond, too.

Is the future of retail a cash-free zone?

In March 2016, healthy food chain Tossed opened the doors of the UK’s first totally cashless restaurant. In August 2016, Waitrose opened its first cashless store in Sky Central, the TV network's head office building in West London, and there is an increasing demand for other high street outlets to follow suit.

Retailers need to keep an eye on the future of payments. But they also need to know how far to go. Future technology may mean we can pay by facial, voice or thumb print recognition, but is that really what consumers want?

We have to ask ourselves: at what point does technology take things too far? Surely a row of manned tills is more customer-friendly than a row of self-service kiosks? Customers will always want to give feedback and make complaints from time to time. Being able to do that face-to-face allows retailers to diffuse volatile situations in store.

Customers are also turning to social media to air their grievances with brands. British Airways came under fire when Hassan Syed paid to promote a tweet complaining about the airline’s bad customer service when they lost his father’s suitcase. The tweet was seen by 76,000 users and went viral in the eight hours it took BA to respond. Are cases like this destined to become more and more frequent as customers become left with no choice but to complain via social media?

Technology, no matter how advanced, is nothing without the human touch. Technology will always have its share of glitches and customers will demand the added support that an all-singing, all-dancing payment system simply can’t provide.

Perhaps most critically, people like doing business with people and we all like to feel that we matter, whether that's being recognised by your local barista, who is processing your order the minute he spots you in the queue, or the sushi store staff who know you like extra wasabi or a fork instead of chopsticks; or having the ability to tailor your experience and request something 'off menu'... The human touch can be a vital part of your customers' experience that breeds an enduring loyalty which fully automated services often cannot replicate to the same degree.

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