2016.02 | mobile wallet strategy

14DD1532-L-Mobile-Payment-CD372_52a_PCR_SPINX_Gas_Pump_Mobile_phoneOne of the most common areas that challenges retailers these days are mobile payments – or as many of them refer to it – leveraging a mobile wallet – which I now interpret from retailers to mean paying without a card or currency versus a specific mobile wallet platform.

I’ve written a number of posts on the subject of mobile wallets over the years, usually lamenting that we will never get away from a physical wallet. The potential for shoppers to not use a physical wallet are certainly more realistic now then when I wrote those posts, but the process continues as an evolution and not a revolution.

The common nirvana that all retailers seek is the ability to seamlessly and simply accept all payment options desired by the majority of regular shoppers while being able to provide a personalized and loyalty building experience. The challenges restricting vendors, payments providers and retailers from that objective are legacy systems, budget, agreements with payment processors, and time to build these payment connections into their systems.

Mobile payments are certainly a part of that over-arching strategy of enabling payment, so what is the best strategy? That will differ by retailer, but there are some universal concepts to consider:

  • To start, target your end state, and attempt to draw the long map back to where things are today. Even if there are gaps, talk to retail solution vendors, payments vendors, card providers, banks and anyone in the industry to access their vision and experience. Keep in mind that all of the technology will change in a few months and it will need to be re-assessed. Basic long term planning as should be targeted for all large scale retail solutions.
  • Don’t get stuck on offering payments within your in house mobile app, UNLESS your app provides a unique value proposition to the shopper that you are trying to leverage and payments is a logical extension of that app.  In my admittedly anecdotal experience, users have lots of apps already, and don’t look for more retailer apps as a rule UNLESS they provide a unique value proposition that fulfills a need to them.  Your most loyal customers may want your app to be able to pre-order their meal, control your fuel dispenser, or buy movie tickets, and it makes sense to enable payments to conclude that shopper interaction.  Make that in app payment as simple as possible with services that can remember the card or retrieve it with a password.
  • Consider the payment options that are already in use or are desirable for your shoppers.  If your shoppers are using credit cards, encouraging them to use a debit driven solution as part of a mobile solution is a challenge.  If you want to drive a particular payment model, be prepared to encourage shoppers with points or deals. Bitcoin sounds cutting edge, but is it worth accepting as a tender for the volume of business and it’s volatility? Having a gift card balance for coffee makes sense, but for groceries it is not logical. If the payment option you need to enable is not available, push the vendors for it.
  • How would a mobile wallet be used at the front end of your store?  If it isn’t dead simple for both shopper and cashier, it’s going to slow the queue and increase wait time.  That is a tough sell for any retail environment, and death for a high velocity retail environment.
  • Consider the full customer interaction with payment integrated. The challenge often encountered is that the majority of retailers have a loyalty program of some type. Shoppers need to identify themselves to obtain their loyalty benefits. With a mobile payment solution, shoppers generally have to show a loyalty card on their mobile, and then use the mobile to pay. Having to scan two different codes or tap more than once seems redundant, but this issue is often not easily solvable today at a traditional point of sale, as loyalty members have to identify themselves PRIOR to tendering to obtain discounts, collect points, etc, and THEN they pay the calculated total at which they pay with their device. (Starbucks manages one scan by using a stored value card tied to a loyalty account. Mobile apps to pre-order food, control a fuel dispenser or buy movie tickets have users registered with details stored and payment can be online by storing a card, so no double tap there either) Consider options to avoid the double tap/scan.
  • apple walletConsider Apple Pay and Android Pay if they make sense for your business.  With Apple Pay, there is some benefit to the security of fingerprint verification for retailers, and it is relatively easy to use with the iPhone and Apple watch, and getting notifications of payments immediately is certainly useful to some shoppers as is the ability to not carry their card.  In Canada the limitation right now is that Apple Pay only works with Amex.  Android Pay is another good option, particularly if you have an Android heavy shopper base.  The downside is that there are additional fees for these solutions.
  • Ensure you support and train users and store staff well on all the payments provided. There is nothing worse than having a customer trying to love your brand and pay with a new option and they cannot.  Payments are getting increasingly complex, but cashiers are catching up.  Many of them have received on the job training from bleeding edge shoppers who attempt every new payment and are willing to risk embarrassment or rejection with new payment types, but it would be better to have a complete map of payment options laid out simply.
  • Leverage your pinpad or contactless reader as much as possible for payments that are not over the air. Whether shoppers have to swipe, dip, tap, or enter a PIN; whether they use a card or a mobile device, the pinpad is currently the interface to which shoppers are accustomed. Keep the transaction and the payment linked physically.  If the transaction is on the mobile, pay on the screen of the mobile.  If the transaction is at a device (POS, Fuel Dispenser, Vending Machine, Ticket Dispensing Kiosk) keep the payment interaction connected to the device and pinpad.  Geo-fenced and over the air on the mobile screen solutions are an awesome concept, but are a challenging jump in logic for most shoppers today.  Unless you are a bleeding edge retailer, that is one for the future.

There has to be a benefit to both the retailer and to the shopper for there to be a reason for mobile payments, and the benefits are slowly tipping the scales towards increasing the usage of mobile.  There are too many things that favour it, and the landslide of devices in the hands of millions means it’s coming sooner or later.  Be sure to stay ahead of it and have a strategy.

2011.43 | Starbucks Mobile Payment in Canada

While our friends to the south have been able to pay with their mobile phones at Starbucks for some months now, that functionality was just activated in Canada last night. I was finally able to use the app to pay on my trip to Starbucks this morning.

For those who need a refresher on how this mobile payment solution works, Starbucks connects your stored value card to a barcode within their mobile apps.  While at the store, the user opens the mobile app on their device and pulls up their virtual Starbucks card on the mobile device’s screen.  When they tender at the point of sale, the cashier scans a barcode from the mobile device with an imager at point of sale instead of swiping a physical card through the MSR.

This solution does not make use of NFC.   This solution does not require your mobile device to be online or connected from a data perspective in any way.  All you need is this barcode on your screen.  Effectively, you could print this same barcode and scan it at the point of sale to pay in the same manner as you would with the phone.

Setting up the app is simplified by the fact that users just enter a login and password for starbucks,ca and the system automatically uploads their card number, card image and balance.  This is exactly what technology is for – to make life simpler – not to make users enter in meaningless numbers.

This simple solution is a terrific fit for Starbucks specifically for reasons I explained when the app was originally released in the US.

Like many excellent solutions, it leverages proven technologies in a combination that fits the users, the retail environment and the business.   For the user, all they need to do is install or update a mobile app, open it, and log-in.  For the store, a new scanner/imager was required at the point of sale terminal, and a new tender option in the point of sale software was required.  Some training to know how to read a barcode from a phone and you are good to go.

Now you have an application with a reason for users to open it.  Well done.  Of course, this now opens suggestions for future capabilities to highlight and increase that usage.

  • Keep standard orders on the mobile device.  Customer scans customer facing scanner at point of sale, and the order is populated on the cashier’s screen.  Speeds order entry and minimized screen touches for cashiers.  Order comes up on screen for validation.  This would be amazing at the drive thru.  No more crackling voices.
  • Upselling on screen based on usual customer orders.  It would have to be opt in, but if the customer is standing in line and they pull up the app to pay it can highlight a good add-on to their order that is specific to them, right when they are ordering.  Provides consistent upsell.
  • In the US it is possible to add funds to the cards of other users as a gift.  Great option.

Whatever retailers do, they should ensure that their app has a reason for existing.  This one has that.  Would this work everywhere?  Certainly not.  Every business is different, and that is the fundamental challenge – building an app that solves a problem and improves something  for customers and stores.

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