Are Smartphone Payments Physical Retail’s Lifeline?


With consumers tethered to their smartphones, the relationship between shoppers and physical stores is evolving as a retailer’s “face” is becoming its website and mobile apps instead of its storefront. And, from a payments perspective, consumers are using these devices to pay for items inside of brick-and-mortar stores and even before they ever set foot in a merchant’s physical location. But smartphones can be seen as a double-edge sword with the showrooming trend that they’ve inspired, where consumers spot a product in a store and use their phones to buy it online from another retailer.

At the same time, however, consumers are using their smartphones for payments in a variety of different retail spaces. Nearly one-quarter – or 24.8 percent — of consumers used their smartphones to pay for groceries, according to the PYMNTS Remote Payments Report, and 15 percent of consumers used these devices to pay for gas. In addition, 27.1 percent of respondents who paid via smartphone for purchases were on location at a quick-service restaurant (QSR).

These are just some of the ways that brick-and-mortar retailers — and solution providers — ranging from habitat by honestbee to Eat Again are tapping into digital payments technology with the help of smartphone technology: 

Almost one quarter — or 24.8 percent — of consumers paid remotely or on location via smartphone for groceries through mobile in-store. And Amazon is not the only retailer offering smartphone payments for groceries. Singapore grocer habitat by honestbee allows customers to pay for their purchases with an app called beePay that connects to credit cards or a mobile payments wallet. Customers then have two choices for how their order is delivered: They can either have a robotic system pack their orders and scan a pass to retrieve their items at a collection point or use a “scan and go” function for orders less than 10 items. Either way, the process seeks to streamline the time-consuming part of the consumer’s shopping journey.

Nearly two in 10 consumers — or 19.2 percent — paid remotely or on location via smartphone for mass merchants through mobile in-store. Target’s “Skip the Line” service had been deployed across the country, it  was reported  last November, as Walmart planned to have “Check Out With Me” at each supercenter ahead of Black Friday. Through Walmart’s system, which was originally tested in lawn and garden centers, store associates carry mobile devices to help customers check out. And Target’s “Skip the Line” mobile checkout experience was brought to some stores in February. That system also entails workers carrying handheld devices to scan products and accept payments.

Approximately three in 10 consumers — or 27.1 percent — paid remotely or on location via smartphone for quick-service restaurants (QSR) through mobile in-store. And some of those payments are for meals that diners enjoy inside of a restaurant’s brick-and-mortar location. Eat Again, for instance, enables diners to order from a restaurant’s menu and pay before they even step foot in a restaurant.  The restaurant, in turn, will receive a notification and can accept the order. The customer can then arrive and the food is brought to her table. After the meal, she can simply walk out of the restaurant and avoid the hassle of waiting for the check. “People want to have the convenience of quickly ordering,” Eat Again Founder Thameem Abdulhameed told in a previous interview, adding that sometimes customers do, in fact, want to dine in.

Fifteen percent of consumers paid remotely or on location via smartphone for gas through mobile in-store. And some fuel apps are expanding beyond the gas station: GasBuddy, which uses crowdsourcing technology to provide users with real-time fuel prices at gas stations, was growing its service in November to offer discounted parking in facilities all over the United States. Beyond the discount, the app was to give users participating in the company’s GasBack program a rebate when they park with the service dubbed Park with GasBuddy. The amount of the rebate, in turn, equates to free gasoline for the customer. GasBuddy Chief Marketing Officer Michael DiLorenzo said, “by extending our capabilities from gasoline to parking, we will help the driving public save thousands of dollars and valuable hours each year, staying true to our mission.”

And only 4.7 percent of consumers paid remotely or on location via smartphone for clothing through mobile in-store. Apparel retailers are teaming up with payment providers. In October, it was announced that H&M and Klarna were teaming up — a deal that would provide consumers with a more personalized shopping experience. Klarna will supply an omnichannel customer payment offering as well as streamlined post-purchase service as part of H&M’s mobile app. In addition, the company will power H&M’s Club payment program and offer other yet-to-be-announced services. Klarna CEO and Co-Founder Sebastian Siemiatkowski said, “Regardless of how and when customers want to shop, we need to be there for them ... this partnership is rooted in a shared obsession about just how good that shopping experience should be.”

From H&M to honestbee, brick-and-mortar retailers are tapping into smartphone technology. But these devices have more use cases than just payments, as they can help build ongoing relationships with customers heading into the future as well.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.