As featured in Point Of Sale News on July 13th, 2017.
What Are Mobile App Based Payments?
There is a new breed of checkout and payment methods being defined for physical stores. Some of the companies with the most recent initiatives in this area include Kohl’s Pay, Walmart Pay and CVS Pay. Starbucks has led the charge in Mobile App based checkout for several years.
The key trend here is to move the user interaction away from the POS and towards the user’s own mobile device. The user interacts with the retailer’s app on their mobile device and uses it to select the payment credential they have on file with the retailer. They complete the payment using this credential.
There are currently 2 methods for these payment types. Method 1 asks a user to present the payment credential in the form of a barcode/QR code to a scanner attached to the Point of Sale. Method 2 asks the user to scan a QR code on the retailer’s Point of Sale device, and then send the payment confirmation from the user mobile device to the Point of Sale. In Method 2, the user can initiate the interaction on their mobile device as soon as they start to checkout. In Method 1, the mobile session begins at the end of checkout when payment is due. For this study, we focused on Method 2, as it showcases the checkout process more significantly.
What Is Rich Checkout?
Rich checkout allows a shopper to digitally combine loyalty points, coupons, special offers, personalized pricing, third party points and gift cards with payments and tender splitting, to provide a seamless experience. This is something that several ecommerce channels have started offering once the user proceeds to complete a purchase from the electronic cart. Some new players now allow for such a user experience to take place in physical retail leveraging the capabilities of the shopper’s mobile device and the retailers own app.
In this scenario, we completed multiple checkouts at a physical retail location where a shopper bought two items. They used a retailer coupon, a retailer cash back offer and the retailers branded credit card for payment.Each of these methods are presented in their current form, which is paper with barcode for the coupon and offer, and a plastic Chip and Signature card for the retailer branded card. Each of these are also presented after all the items being bought have been scanned by the associate which is the typical method in retail today. The flow below shows the current Market Baseline.
The blue boxes show steps taken by the associate, and the green boxes show steps taken by the shopper.
The market baseline gets extended in time if the shopper forgets to bring their retailer branded credit card with them to the store. Most stores have a mechanism to look up their card, which requires the shopper to present an ID and enter their sec
urity code number. For impulse purchases, or infrequent shoppers, this is a very common scenario. Since retailer branded cards may be a private label, shoppers tend not to carry them in their physical wallets all the time.
The flow above gets modified after the “Display Total” step, to accommodate the instore credit card lookup.
Mobile Rich Checkout:
In this scenario, the shopper connects digitally to the POS through a cloud based service. This connects to the retailer back-end at the beginning of checkout. They can scan a QR code identifying the retailer POS at the start of checkout. This allows the shopper to see their entire physical cart on the mobile device within the retailer app and apply coupons, offers, cash back, rewards, and payment methods with a single click. The ideal combination can be pre-selected for the shopper, so they don’t need to make these choices. Instead of the shopper and associate working through the checkout steps one after another, they can carry out their respective tasks in parallel, saving considerable time and friction at checkout
Test Case 1 – Market Baseline With Store Card Present
Test Case 2 – Market Baseline With Store Card Lookup
Test Case 3 – Mobile Rich Checkout
Checkout Time Reduction With Mobile Rich Checkout
Average Reduction in Checkout Time = 28 seconds
Average Percentage Reduction in Checkout Time = 42%
Average Reduction in Checkout Time = 97 seconds
Average Percentage Reduction in Checkout Time = 72%
Improvements in checkout time can be achieved by deploying a Mobile Rich Checkout solution that is included as part of the retailer mobile application. Since the solution does not require hardware replacement, it can be quickly deployed in the existing store systems and does not interfere with current store operations. As Walmart CFO Charles Holley said in 2012, “For every second that WalMart reduces in checkout time, we save $12 million annually in cashier wages.” The checkout time reduction shown by the empirical tests conducted with Mobile Rich Checkout, clearly translates into considerable operational savings for the stores.
About the Author
Amitaabh Malhotra is the chief marketing officer of Omnyway, an integrated platform for payments, loyalty rewards and offers that encourages consumers to use their mobile phone for all aspects of the buying journey.