Mobile Payments 2.0: Building Better Retail Experiences

Payments has by and large been a growth business for the last half decade or so, and that fact has been mappable in scores of innovations around the world. But, as PYMNTS’ Karen Webster pointed out, for all of those advances, one is conspicuously missing from the list — and that’s despite years of predictions that its ignition was just around the corner.

“Here’s one thing that the last three years hasn’t done: Increase the consumer’s appetite to turn their smartphones into a digital payment form factor when they check out in a physical store,” Webster said.

That reality was born out by two-and-a-half years of PYMNTS and InfoScout tracking figures in the marketplace through the Mobile Payments Adoption and Usage report.

Apple’s CEO, Tim Cook, can accurately boast that Apple Pay is far and away “the number one [near field communication (NFC)] payment service on mobile devices, with nearly 90 percent of all transactions globally,” but the reality undergirding that brag is that 90 percent of a really small number is an even smaller number.

After three years in the market — and no lack of fanfare — Apple Pay adoption rates have just barely gotten above the 5 percent mark. That is an accomplishment, though, as Samsung Pay is just over 4 percent after two years and the team at Android Pay devoutly hopes 2018 might be the year it cracks the 2 percent mark for usage.

As it turns out, consumers weren’t looking for a new form factor. It seems they like their payment cards just fine, understand them and know they work everywhere and, as such, customers are happy to whip them out at checkout nine times out of 10. That doesn’t mean they are deliriously in love with their payments processes and couldn’t be incentivized to make a change, however.

According to the PYMNTS’ How We Will Pay study, a Visa collaboration, 60 percent of consumers find their online and in-store shopping experiences unproductive, inefficient, time-consuming and even boring. The same study showed 66 percent are open to using devices to connect to a seamless payment experience.

Customers are looking for new and better ways to pay, but a change from a card to a phone isn’t registering as a better way to pay so much as it is registering as the same experience — now with a slightly different object in one’s hand.

Retailers in 2017 have seemingly started to come around to that idea. They have realized that while mobile payments alone aren’t sufficient to do much in the way of altering consumer behavior, mobile payments wrapped around a faster, cheaper and easier shopping experience might actually have some legs after all. If the first round of the “Pays” were dominated by technologists and financial services players, the 2.0 version has been much more about retailers and the value they can find via mobile.

The early figures even indicate that some are gaining a foothold.

Walmart Pay’s Rapid Rise

According to the PYMNTS and InfoScout figures, Walmart Pay is showing the most potential in the shortest amount of time. With a year in the market and an adoption rate within striking distance of Apple’s at 5.1 percent, the data also showed 47.2 percent of respondents who shop at Walmart use it every time they can. Only 6.6 percent said they’ve never considered using it at all.

But Walmart’s real payments secret sauce is the value-added solutions around money and customer services the company built into the app that houses Walmart Pay. Consumers can also use that app to initiate wire transfers through MoneyGram, check gift card balances, apply coupons and have all receipts sent automatically to its Savings Catcher function.

The point, according to Walmart’s senior vice president of services, Daniel Eckert, is to meld payments into Walmart’s larger mission of saving time and money for the busy families that make up its customer base.

“There is something very powerful about the ease and simplicity of Walmart Pay,” Eckert told PYMNTS. “What’s even more powerful though, is what this means for our customers. We want to make every day easier for busy families. We’re connecting all the parts of Walmart into one seamless shopping experience with great stores, easy pickup, fast delivery, frictionless checkout and apps and websites that are simple to use.”

Walmart still has hurdles to clear, and high ones. Cash remains Walmart customers’ favorite payment method, and EBT cards can not be added to digital Walmart accounts for payments. But Walmart Pay, which is nearly unique among mobile wallet players, has built payments into an overall omnichannel experience that is sticky for consumers and gaining ground fast.

We look forward to 2018’s additions.

Target Jumps Into the Mobile Payments Race

Target was among the retailers who entered 2017 most eagerly hoping to hit the reset button, and rumors about it adding mobile payments to it services lineup began swirling early that January. Outside that initial tease, however, not much was heard on the subject until 2017’s closing weeks, when Target rolled out with a mobile payments platform of its own.

Notably, the company is not calling the offering “Target Pay,” though most tech writers seem to be.

Instead, Target announced in early December that it would be adding a mobile Wallet feature to its mobile app and offering consumers the opportunity to enter their Target REDcard credit or debit card into the wallet and use it to pay directly at the point of sale. Using its eWallet, Target customers can also use Cartwheel — its price matching feaure — with a single scan of their mobile devices at checkout. The goal is to make checkout quicker, and to offer convenient digital savings by including Cartwheel offers and weekly ad coupons, along with the 5 percent REDcard discount.

“Wallet in the Target app makes checkout easier and faster than ever,” said Mike McNamara, Target’s chief information and digital officer. “Guests are going to love the convenience of having payment, Cartwheel offers, weekly ad coupons and gift cards all in one place with Wallet.”

Target has further noted that gift cards and other rewards will also soon be storable within the Wallet. Echoing a theme, the company’s payments upgrade comes in the context of a broader digital push that has seen it moving more aggressively on eCommerce and omnichannel pursuits.

The retailer recently announced its new GiftNow service powered by Loop Commerce. The GiftNow option can be selected when viewing products on Target.com, allowing customers to assemble and send a gift electronically. Recipients can view the gift online, select the size or color of the product or pick another item entirely, thus saving time and money for both Target and its customers by ensuring gift recipients are sent items they will want to keep.

It has unveiled it would be adding 12 exclusive brands by the end of 2018, eight of which were already available during the 2017 holiday shopping season. The brands being introduced this year include products for babies and kids and apparel for both men and women.

“While there’s an incredible amount of change happening across retail, we’re focused on doing what’s best for our guests and leaning into what makes Target special,” said Target CEO and chairman Brian Cornell. “We’re making progress against our long-term strategy.”

The PoS Free Future

In other digital trends, it appears customers don’t want to wait in line at the point of sale (POS). The overwhelming success mobile payments has enjoyed while enabling line-busting at quick service restaurants (QSRs) all over the map speaks to that quite clearly.

In a recent interview with PYMNTS, Visa’s vice president of innovations, Shiv Singh, noted we are only really seeing the beginning of that trend as regards coming trends in mobile payments commerce for the next 18 to 24 months, according to his company’s Innovations For A Cashless World report. According to its findings, retail will soon be a world in which lining up at the cash wrap will no longer be a universal experience.

“We can look at Uber, or how Starbucks now takes 20 percent of its orders through mobile order-ahead,” Singh noted. “Can you imagine going to an Apple store and lining up at a cash register to pay? No, of course not. And now we have Amazon rolling out Amazon Go — it really is only a matter of time before that experience is part of Whole Foods as well.”

Anecdotally, one has seen the “POS everywhere” concept rolling out at retailers of all sizes and shapes nationwide. AmazonGo’s convenience store of the future, through which customers can select goods off the shelf and be automatically and correctly charged due to the magic of sensors. The company has had some notable execution issues with the tech, though, and those have necessitated some delays.

Walmart’s solution is a bit less high tech, but customers in Sam’s Club locations nationwide can already scan their purchases while walking the isles. Each item’s barcode is scanned through an app, which keeps a running tally of all items in the cart. Said app also offers checkout and payment options, as well.

When they are done shopping, Sam’s Club customers can tap to pay and have a receipt sent to their phones — no need to stop at the cash registers. That receipt is then shown to a Sam’s employee on the way out the door, much the way physical receipts are checked to ensure customers are actually paying for all their items. There are rumors that a similar service is coming soon to Walmart locations, though those rumors have not been confirmed.

But as solutions proliferate — and they surely will — one thing is becoming increasingly obvious: Mobile payments as a one-to-one replacement for credit cards may not have much of a future, and the adoption numbers seem to keep singing that same tune in a variety of keys in report after report.

But mobile payments that can exceed what credit cards offer — including faster checkout, clipping-free coupons and the ability to skip the front-of-the-store POS line-up, among others — those experiences seen to really have a hold on consumers.

Which means retailers have every reason to build them, and we look forward to reporting on their efforts.