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GUEST COMMENT Why the death of paying in-store is nigh

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Following in Amazon’s footsteps, Aldi, Sainsbury’s and Tesco are proving that “just walk out” checkout-free stores are not a mere fad. With the help of technology, a flurry of big grocers are rolling out cashless in-store experiences. What we are witnessing is not simply the digitisation of in-store payment, but the removal of the act of paying altogether.

While the checkout-free model may be seemingly novel, it’s a proven concept that has already been perfectly executed by Uber. In the days before Uber, passengers stressed about whether the cab takes cards, if they have cash on them, whether the driver will have enough change. But with Uber, you just open the door and go, without thinking about the financial transaction. And new data from Sensei shows that 70% of UK consumers welcome this checkout-free shopping experience.

Paying in-store is going to become a thing of the past faster than you think. And it’s going to offer an opportunity for adaptable retailers to encourage loyalty and improve customer satisfaction, far beyond ridding the pain of queuing. So what do retailers need to know to get ahead?

Contactless is going to feel as antiquated as cash

In-store payments have undergone a makeover in recent years, with the proliferation of contactless card and mobile payments like Apple Pay. And the pandemic has understandably acted as a giant boot, pushing people and retailers towards these digital methods, with cash usage curtailing.

But as checkout-free stores gain a foothold, we can expect contactless payments to feel antiquated in the near future. Sure, tap and pay is faster than counting your coins, but it hasn’t removed the bottleneck of queuing yet.

In February, Tesco’s in-store card payment system stopped working across all of its UK stores, causing chaos with long queues and customers resorting to old fashioned cash at the tills. At a time where consumers are accustomed to instant access and the latest payment technology, they increasingly won’t settle for this kind of experience. And it doesn’t need to be like this. Paying can become a thing of the past.

Eradicating paying, transforming loyalty

Consumers want convenience and speed. To be able to grab items and go. But aside from saving time paying and queuing, which is an obvious win for customer experience, retailers have an opportunity to encourage loyalty if they’re smart.

Take Starbucks for example. The Starbucks app has changed the way that its customers buy coffee today. You can pre-order, pay, and skip the queue. However, loyal customers can also benefit from exclusive access to discounts, rewards and extra perks all in the app. The financial experience here is so deeply baked into the digital experience that the customer hardly notices, meaning retailers can not only improve the payment experience, but also generate loyalty by bolting on rewards that keep customers coming back.

Building invisible payment models

This kind of invisible payment experience is possible thanks to what is known as embedded finance, whereby payment is integrated into an existing experience. When you interact with Amazon Go or the Starbucks app, you’re interacting with an embedded finance experience.

As both of those examples show, eradicating paying through embedded finance can take different shapes and forms. With talk of taking buy-now-pay-later (BNPL) services in-store, there’s also another opportunity on the horizon for retailers to bolt that on to these models to deliver an even more convenient and impactful payment experience for customers. And for retailers, this is going to help fill up baskets, drive loyalty and increase revenues.

Aside from the benefit of lowering costly point-of-sale hardware, making the switch to an app-powered payment model also enables retailers to accumulate data on their customer’s shopping behaviours. Over time, insights into what customers buy in-store and how often can be used to deliver a data-driven customer experience through more personalised offers and rewards.

Time for switched-on brands to respond

Consumers today are not only demanding more from the products they buy, and the types of brands they shop, but also the way they interact with the brands they love. That includes how they pay in-store. Contactless might have digitised how we pay and streamlined a clunky experience, but why choose to stand in a queue and unpack your basket before paying, when you could just grab what you need and walk out. The supermarkets are already leading the way and providing an enhanced digital relationship to customers. It’s time for switched-on retailers to follow.


Louisa Murray, chief operating officer UK & Europe, Railsbank

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