by Ward Hagenaar, Connective Payments
Innovation in the checkout process of physical retail stores has been slow in the Netherlands, or hasn’t it?
Building on the huge success of contactless payments we gradually experience next steps in development of the checkout process. The battle to convert cash into electronic payments enters the final stage. In 2018, only 37% of payments in the Netherlands have been paid with cash at checkout*. Contactless payments accounted for over half of electronic payments and continued its strong growth.
In fact, contactless payments paved the way for convenient secure payments to be the new normal for consumers. It is clear to see that the first self-checkout solutions in grocery stores respond to consumers requirements for autonomy. It also appears that consumers like to order in-store via apps and kiosks, for example at quick service restaurants. However, efficiency, faster sales with fewer staff, seems to be the most important driver for the merchant.So far, an excellent track record but only gradual innovation of the user experience. Since consumers value saving time as a new type of coupon, it seems they are ready for the next step: cashierless shops. After international trials with Carrefour, Auchan and, more famous, Amazon Go, Dutch leading grocery store Albert Heijn now pilots with a cashierless store.
It requires consumers to check-in with an NFC enabled card, wearable or smartphone. Consumers pick the product from the shelf while sensors and cameras register what’s in the basket. The payment is initiated by tapping the NFC terminal again. During the pilot there is a restriction to payments below the 25 euro transaction limit that requires PIN verification. Not an issue for now, because the primary focus is on verifying consumer response to such unmanned convenience shop concepts. During production rollout, I assume things will be set up more sophisticated, for instance by offering multiple payment solutions and potentially alternative interaction flows without a need for active check-in and out.
In newer solutions, it would be interesting to see the support of online best practices with a personalised user experience. Accenture research shows millennials are mostly interested in this and many consumers are ready to exchange their data to get more convenience, personalised recommendations, time saving solutions and logistical services, loyalty rewards and offers. This means less anonymous in-store purchases connected to an account-based consumer profile and stored payment credentials, with explicit consumer consent.
New in-store user experiences must be highly personal and lead to differentiated in-shop experiences. The main question is what this highly data driven retail experience will mean for competition in physical retail. After all, SME merchants have less access to consumer data and technological skills and require third party support to remain competitive.
As every technological innovation breeds its opposite (fastfood vs slow cooking, digital vs vinyl etc.) it would be interesting to see some SME merchants optimise the old human, intimate customer experience as a unique selling point versus the pseudo personal experience in big supermarkets and the like.
*source: DNB & Betaalvereniging Nederland research “Betalen aan de Kassa 2018”.