One of my colleagues recently shared an anecdote about something she observed while in a hotel lobby in San Francisco. A group of young people had gathered, ready to head out for the evening. They were debating how to get to their destination. After a few minutes discussing taking a taxi (several of which were lined up at the hotel) versus walking, the consensus was to “Uber.” The observations: the taxi industry is toast and, conversely, as one of my other colleagues pointed out, you know you’ve made it when you’ve become a verb. (Note to self: Work on making PYMNTS.com a verb.)
The Uber experience is successful for many reasons, but mostly because it creates certainty from a situation that, before Uber, was anything but. With the Uber app, consumers can reliably get taxi service, track the car while it’s in route, and be transported to their final destination in style. But the Uber experience also eliminated the friction at the end of the ride – paying for it. No more being told that the credit card machine was “broken” or having to slide cards or cash thru the nasty plexiglass partition present in many urban taxis. A big part of the “Uber experience” was about jumping out of the car at the end without having to pay, an experience many described as “making payments invisible.”
The simplicity of that experience has created a legion of Uber loyalists and has, therefore, been at the heart of many mobile payments’ use cases over the years – making payments invisible. But is that really what Uber did and should that, in fact, be the aspiration of mobile payments’ innovators?
Well, let’s imagine what would happen if going to the grocery store became a true “Uber experience.”
Consumers would have an app and a card registered to that app. That app would somehow track the amount of each item that consumers put into their carts as they did their shopping. Consumers would leave the store, groceries in hand, averting the usual checkout process. They’d get an email 15 minutes later letting them know how much their card was charged for their purchases.
As dreamy as this sounds, I’m not sure that most people would like it all that much. The Uber Experience works for Uber because people are taking one trip and know, more or less, how much the ride will be. Often, it’s not even perceived as especially expensive. In a taxicab, the payment and checkout process is all mashed into one and has always been a huge point of friction, in large part because many taxi drivers don’t like being paid by credit card. Uber has made payments invisible by making the entire checkout experience, well, invisible. Getting out of the taxicab is the equivalent of checking out of the taxi, with payment automatically triggered at that moment. The overall experience is predictable and hassle-free.
The same can’t be said for a trip to the grocery store where multiple items of different price points (that change daily in some cases) are being purchased. The only certainty and predictability is that one will leave spending more than intended.
But that’s not to say that there isn’t a ton of friction that consumers would love to eliminate from the grocery store experience. It’s not clear that payment at checkout—what’s often a few-second swipe, sign, thank you ma’am process—is that burning an issue. Consumers say that the biggest sources of friction while shopping and checking out in any store is getting good customer service and waiting in line to pay–not the act of payment. At checkout, it’s also validating that their loyalty status has been recognized and savings properly applied, missing out on discounts because they forgot to bring their paper coupons, and making sure that they’ve been charged the right amount of money for each item purchased. Being able to see and then approve those charges before handing over their card to pay isn’t a problem that consumers complain about.
In fact, that process has been a part of checkout for as long as, well, forever. It gives consumers the certainty of knowing how much they’ve spent and exactly how much is being charged to their card before leaving the store. It also gives them the opportunity to question the amount before the transaction is completed. That, in turn, gives them the feeling that they are fully in control of their spending. Even the “grandma” experience that innovators talk about wanting to emulate via the mobile device–recognizing a consumer as she walks into the store and leaving without having to produce payment credentials–was never about eliminating the process of agreeing to charges before leaving the store. Even grandma (ok, kids, great-great grandma) had to sign.
This begs the question: In a mobile payments world, is “The Uber Experience” something that innovators should strive to replicate?
Using the mobile device to make the in store shopping and checkout experience predictable and hassle-free seems the logical greenfield for creating demonstrable value for both consumers and merchants. For instance, there are many things that can—and should—be made invisible to shoppers, while also adding a lot of shopping value. Two of the most important:
– Using Beacon technology to recognize a consumer when she enters a store, activating her customer profile to trigger and assemble offers and promotions that are automatically applied at checkout.
-Suggesting items that she might like to purchase or reminders for things that might need to be replenished based on prior purchasing patterns.
These activities also provide consumers with the certainty that they don’t have to keep track of offers and promotions to benefit from them, while making checkout feel hassle-free. Once that happens, the ability to see and then accept those charges and pay using mobile devices in-store would not only keep consumers in control, but create a more predictable shopping experience that could also create loyalists.
As for what that mobile checkout experience is, I personally think that the more familiar it is for consumers, the more likely they’ll want to use it and feel safe using it. (See my piece from last week with further thoughts on why I think that’s QR Codes, PINs and experiences that replicate the online checkout experience.)
Online, of course, is a very different story, where checkout is a nightmare and getting worse. This is especially so when consumers use mobile devices to discover what they might like to buy and then use those devices to try and complete those purchases. These days, more internet time is spent on mobile devices (mobile 42 percent, tablets 12 percent to desktop’s 47 percent but the bulk of online shopping still takes place on the desktop and that is for an obvious reason: there’s nothing worse than typing in card information on a teeny weensy mobile device or even a tablet screen. It’s why Amazon and PayPal today dominate the online shopping experience. They had to eliminate the friction of checking out online more than a decade ago in order to have a business and why PayPal is working hard to leverage that advantage to expand acceptance in-store, courtesy of its digital payments product. Interestingly, though, creating a process that made payment invisible was never Amazon’s or PayPal’s goal (although making payment credentials invisible to sellers was PayPal’s big value proposition). The key goal they had was making checkout less of a hassle. That sentiment also seems to be at the heart of Visa Checkout’s value proposition and why it says it has abandoned its earlier aspirations of being a mobile wallet.
Uber’s success is a brilliant application of how mobile devices–and the blending of on- and offline commerce—can make an unpredictable process predictable and hassle-free. The Uber mobile app just also happened to make checkout nonexistent and payment invisible.
But Uber’s app seems to be an exception in the rulebook of payments’ use cases. Replicating that experience through in-store payments would eliminate the one certainty that consumers greatly value about the payments experience: being able to verify and accept charges before leaving a merchant. If anything, in the age of the seemingly inexhaustible security breach, that would seem to be more important as surveys confirm that consumers don’t trust merchants with their data. Even use cases where there’s extraordinary friction associated with checkout, such as restaurants, pay at the table apps don’t have consumers simply getting up and leaving at the end of the meal without accepting their total and adding a tip first.
Using technology to reduce friction at checkout and make paying easier seems like the winning combination in mobile payments. And whoever does that the best has a shot at becoming the verb we all use to describe that optimal mobile payments experience.
So, who do you think that will be?