The Clearing House Sees Options and Uptake Fueling Growth of Instant Checkout

Instant checkout, scan-and-go and unattended retail have been buzzwords as consumers flock back to stores.

Turning promise into reality is something else entirely.

Peter Davey, senior vice president and head of the Innovation Lab at The Clearing House, said the path toward the ultimate, seamless brick-and-mortar experience has been anything but a straight line.

Many companies are grappling with just what their consumer wants at that last point of interaction, when it comes time to pay for the goods in the basket. Some merchants are faced with the ever-present specter of fraud and shoplifting. Still others are trying to figure out how to fold loyalty and rewards into the experience — contactless payments too.

As Davey told PYMNTS, “there are a lot of different technologies being tried out — and there is now a plethora of different options at our disposal.”

In the brick-and-mortar settings, first-generation unattended retail tech is being replaced by second- and third-generation tools, which include RFID scanning and QR codes, which in turn connect to loyalty applications.

“Larger retailers are doubling down” on these features, he said, noting that companies such as Kroger, Target and Walmart have been enabling self-directed checkout at scale. These commerce behemoths, and others, are finding particular value in the fact that seamless checkout helps cut costs, boost security and improve the overall customer experience. Where QR codes were moribund before the pandemic, suddenly they’re enjoying a renaissance as consumers have gotten so used to using their own devices to get things done on a daily basis.

There’s greenfield opportunity, too, to promote scan-and-go functions within the aisles, although it may take some time for the commerce ecosystem to fully embrace those options because the payments are so woven into the process that customers find it jarring and because there’s still retail “breakage” in the form of theft. Wegmans, in one example, turned off its scan-and-go app last fall until such time as it can “make improvements” to the process and stem losses.

“I call it ‘organized shoplifting,’” Davey said, about scan-and-go, a bit tongue-in-cheek. “It makes consumers feel like they didn’t pay for something.”

Fraud is top of mind for retailers already operating on thin margins and seeking to cater to their consumers’ desires for a quicker checkout. Davey said that in at least some cases, the merchants who have set up security cameras and leveraged artificial intelligence (AI) to track people throughout the store, are seeing fraud rates declining. But for many others, having staff onsite to manage and oversee a dozen or more checkout lines can prove expensive and ultimately futile as fraud rates remain stubbornly high.

In other examples of friction in brick-and-mortar, Davey noted that in many cases, consumers are “a bit ahead of the game” in terms of the ways they’ve been paying, and merchants need to catch up. Many firms that are enabling smart checkout have yet to enable contactless payments, although that’s something consumers want.

Looking ahead, there’s a movement to marry loyalty and faster checkouts into one seamless continuum.

“You’ve also got a lot of companies that are doubling down on their loyalty applications and smaller merchants entering the loyalty programs too, along with automated checkout capabilities, enabled by firms like Square,” he said.

The merchants that bring the two together will reap benefits. Davey offered up the example where a company like Target “knows” just where a customer is in the store, knows that customer likes to buy Charmin tissue paper, yet the store has an oversupply of White Cloud.

“They may steer you toward buying White Cloud with an automatic redemption coupon there,” he said, accessible on a customer’s own device in hand.

And within those checkouts, he said, there’ll be a range of payment options on offer, spanning pay-by-bank, alternative payment methods, short-term credit and buy now, pay later (BNPL), and even tokens issued into mobile wallets.

“At some point, all of these things become commonplace,” he told PYMNTS, noting that for digital wallets, seamless checkout and loyalty’s great convergences, “the future looks bright.”