The checkout is indeed changing, in every dimension — from what consumers use to check out to what happens throughout the process.
While the "fundamental value” of that process remains the same — as Hitesh Anand, VP of Product, Commerce Enablement and Mobile at Verifone, remarked in a recent conversation with MPD CEO Karen Webster — all that surrounds that value is evolving.
In addition to the fact that the proliferation of smartphones has brought about the ability to make payments with them and to check out at a mobile point of sale, Anand points to the evolution of the checkout process from “physical-physical” (on both the consumer and merchant ends), to online, to online-offline (buy online, pick up in-store), as now having come to include even offline-online, wherein a consumer purchases an out-of-stock item in-store and has it shipped to their home.
As the checkout experience — in-store, online and everywhere in between — continues to expand to be more than just about payment and include elements like loyalty and rewards, what has come to the forefront is the concept of a “smart POS.” Anand defines that as a point-of-sale device that “allows people to interact with it for different services, that can allow payments in a non-stationary manner and — in the payment flow — bring more value to the consumer and the merchant.”
“Nobody gets up in the morning and says, ‘I want to make a payment today,’” remarks Anand. “They say, ‘I want to buy breakfast,’ or ‘I want to buy a pair of jeans,’ and payments is a part of that broader commerce.”
In that regard, Anand views what were once identified simply as “payment terminals” shifting to become something more robust: “commerce-enabled terminals.”
Toward that end, Verifone is building a platform to enable nonpayment apps, such as loyalty, coupons, offers, et al., to be part of the checkout process. The focus, notes Anand, is on more than just hardware, allowing third-party applications and services “to help improve the merchant’s and the consumer’s experience.”
Anand believes that it is the direction in which the entire payments industry is headed, pointing out that a similar change has happened in other verticals — first and foremost with mobile phones, then streaming media devices and, more recently, in cars.
The question arises, then: As payments continue to evolve to become less about payments and more about the customer experience, will there eventually come a point where the payment terminal itself is unnecessary?
Anand doesn’t believe so — not entirely, anyway. Whether the payment process becomes something that is voice-activated or in the increasingly common case where a consumer’s smartphone is interacting with a BLE beacon, he points out that, in the end of any such transaction, “there is a device that is still the conduit [that helps make this happen].”
“The interaction will continue to change,” Anand tells Webster, “but there still needs to be a physical device. So, in that sense, a terminal will be there. We're not claiming to know what all of the new experiences will be [in the future], which is why we will open up the platform for third parties to innovate on top of it.”
Those innovations from Verifone will include apps that merchants can easily download to their terminals in order to provide customers with new in-store experiences and added value at the point of sale, Anand said.
Which of those innovations will take hold among consumers, however, might be difficult to determine. Webster points to the fact that, in the U.S., adoption of what was expected to be a very big innovation, mobile wallets, has been effectively negligible.
That actually doesn’t surprise Anand, because, as he explains, mobile wallets don’t really solve anything in the U.S. as much as they do in other countries.
In Hong Kong, mobile wallets took off due to the demand for coupons and loyalty; in India, they became popular for a completely different reason: a lack of electronic money.
While the emergence of EMV stateside does potentially make the “tap” process of mobile wallets a little more appealing to U.S. consumers than the “dip, wait, enter a PIN, remove the card” process of chip-and-PIN cards, Anand points out that in both cases the user is still waiting in a line.
“Where the real value is,” Anand observes, is in answering the question: “What more can that wallet experience bring?”
If it's just payments, that’s nothing new, and it’s not going to drive consumer adoption. However, posits Anand, if the mobile wallet allows the consumer to tap their loyalty card, receive digital coupons and/or pay with points at the same time, “that's where the value is.” And that’s when consumers will use it instead of their physical card.
Anand shares that Verifone has “taken [things] to the next step” in that respect, working with Apple and Google to allow payment terminals to read loyalty cards and coupons that are integrated with mobile apps, “thus extending the value of the wallet.”
The more a process like that becomes available, “that’s where I believe wallet usage will go up,” states Anand.
He acknowledges that merchants face something of a conundrum in trying to meet consumers' increasing demands for new capabilities at checkout, but also points out that, for merchants, “the infrastructure is already laid out,” as virtually all of the new Verifone solutions that merchants put in place to prepare for EMV can also accept NFC and mobile wallets.
From that point, it is up to them to add particular value propositions on top of it.
“At the end of the day,” concludes Anand, “if a mobile solution provides value to the customer, they will use it.”