Retail payments: the big issues discussed

E-tail giant Amazon last week launched what many observers are describing as a payment solution to rival PayPal, and the move brought into sharp focus the competitive payment landscape that currently prevails across the retail industry.

From Login and Pay With Amazon to other more established eCommerce platforms, via mobile wallets and contactless in-store terminals – the payment options for consumers are growing all the time to keep pace with new ways in which consumers want to shop.

But there isn't a clear roadmap. What is successful as a method of payment, whether it be online or in a physical store, will only be dictated by the customer: and it is still unclear whether they will be willing to adopt the raft of new payment solutions out there.

On 7 October, the UK and Europe's leading retail show RBTE hosted its payment steering committee meeting at PayPal's headquarters in Richmond, south-west London. As well as discussing many of the payments-related features and exhibitors that the industry would like to see at RBTE 2014 next March, the meeting gave some of the leading players in the payments sector the opportunity to have their say on the most pertinent issues of the day.

"Retailers want to know when the right time is to invest, and they need to make that decision based on what the consumer actually wants," said payments manager at Marks & Spencer Craig Borrett.

"There's lots of confusion around the breadth of technology available. Payments used to be a boring part of the retail industry, but now it's a whole different ball game."

So why is that the case? Over the last few years there has been huge amount of talk, for example, about mobile payments. The rise of the smartphone has led to the idea that consumers can now pay for goods using their mobile device.

This, in turn, has led to the concept of the mobile wallet, where consumers are able to store all their bank card details and loyalty cards on a phone app, which is being marketed as a way of making the shopping and payment process a much more convenient one for the shopper.

It is not a new idea, but it seems that we are gradually moving to a position where a number of mobile wallet providers have received significant buy-in from retailers to make the technology a reality. But how far away are we?

Rohit Patni, co-founder and director of YESpay, said: “Still no-one has found a proper business case for mobile wallet roll-out. I had a business in 2000 that had a mobile wallet, but the difference than was that the smartphone wasn't yet prevalent.”

Payments Consultancy director Mark McMurtrie is confident, though, that after much bluster over the last few years, the right technology is now in place and there are now enough people using smartphones to ensure there is a market for mobile wallets to enter the retail landscape in 2014.

"Wallets are going to be a part of the picture in 2014," he explained to Essential Retail recently.

"There'll be a few wallet options to choose from, in a similar manner to the way we choose between the card providers like Visa, American Express and MasterCard."

Another payment process that has risen to prominence over the last five years is in-store contactless transactions. Many leading retailers, including Spar, Greggs and The Co-op Food, were among the first to offer their customers the opportunity to purchase goods without having to enter any card details at point of sale.

Consumer confidence in using this near-field communication (NFC) technology is growing, despite some recent well-publicised controversies involving system malfunctions, but with transactions of this type having a £20 cap it is set to be part of a wider set of options that customers have in-store, as opposed to the number one choice.

And therein lays one of the major talking points in the industry today: there are so many options when it comes to payments that it is proving difficult for retailers to know where to make their investment. With the rapid development of eCommerce and cross-border trading, there are now even more solutions to consider in this field.

Alex Rolfe, managing director of Payments Cards and Mobile and Mobile Payments World, commented: “For retailers there's a lot of confusion on what's being offered – we need to focus on what are the pain points right now, not what's happening years down the line. 

"Look at how you can use payments to work better for your business. What can retailers do now to make payments improve their bottom lines."

Rolfe's point emphasises how payments are viewed in a very different way to before. With the advent of technology, consumer adoption of new devices and the power in retail now very much lying with the switched-on and demanding shopper, there is a need to take the complication out of payment.

YESPay's Patni remarked: "Payments were a necessity five years ago but now they are a strategic advantage."

Laurel Wolfe, director of communications at VeriFone EMEA, highlighted the fact that there is now an array of different payment-related job titles at a retail business, including PCI managers and eCommerce managers that may have a focus on online payment processing.

The latest British Retail Consortium (BRC) research into payments indicates that cash is still used in more than half of all transactions and debit card usage is still significant.

Indeed, Wolfe raised a hugely valid point during October's meeting, asking the question: "The card isn't broken so why fix it? If mobile payment is going to work it needs to add value."

Consumers will dictate which payment methods retailers do embrace, and the BRC data from last year did also suggest that alternative methods of payment are becoming increasingly popular.

Enter companies such as PayPal, which is an example of a business looking to provide a unique in-store payment offering that has got many industry commentators purring. The PayPal Beacon was unveiled in the US in September, and uses Bluetooth Low Energy technology to enable connected devices to communicate with each other in a seamless process.

An integrated solution on a phone, the Beacon is being marketed to retailers as an energy-saving alternative to PDQ machines, NFC and GPS, and allows a transaction to take place without customers having to open up an app, turn on GPS or even require phone signal.

During the meeting, Rob Harper, head of retail services at PayPal UK, spoke excitedly about the new tool, which is expected to be rolled out in 2014.

"I think we get hung up by keeping talking about payments which isn't very exciting," he explained.

"Let's talk about the shopping experience and where payment fits into this? It's not just a transaction – let's look at the technology and the experience and make it more fun."

There was certainly much to debate during the steering committee meeting, and there is an array of new products and solutions showcasing exciting new technology for retailers to utilise. However, perhaps the point that most emphasises the importance of introducing the right payment methods is relatively simple.

Retail is commerce. Commerce is the process of buying and selling. Without a payment platform, the entire transaction process that generates the revenue for a retailer cannot be completed.

McMurtrie said: "It's critical for retailers to close the sale, which just goes to highlight the importance of payments."

Many of the topics discussed during the steering committee meeting will be reflected in the seminar programme for RBTE 2014, which takes place at London's Earls Court between 11-12 March. Hundreds of exhibitors from across the retail solutions spectrum will be showcasing their wares, including a wide range of payment technology providers, and October's meeting just goes to indicate that such a show is vitally important for all departments of a retailer's team.

Nick Field, RBTE event director, said: "Ever since the first RBTE in 2011, payments have been strongly featured in the event with a dedicated theatre and over 50 specialist payments solution providers.

"With the 2014 show they will have even more focus in light of the huge industry change and in particular due to developments around mobile. Payments are also business critical for retailers as it's the last customer touch point. Our offering next March will be strengthened by the impressive team of experts serving on our payments steering committee that are advising us for our payments content.

"Getting it right leads to better customer engagement, reduces costs and aids customer acquisition. RBTE since its launch has been the leading retailer payments event in the UK and Europe and will be strengthened further by our exciting new plans."

RBTE's payments steering committee is made up of a number of leading retailers, vendors and associated organisations. RBTE would like to extend a huge thank you to the members of its 2014 committee for their forward-thinking approach and for offering their precious time and integral feedback. Their enthusiastic contribution showed that retailers are hungry for an event rich in fresh content, ideas and innovation.

The members of the RBTE payments steering committee are, as follows:

Rob Harper, head of retail services, PayPal UK

Laurel Wolfe, director, communications, VeriFone EMEA

Mark McMurtrie, director, Payments Consultancy

Rohit Patni, co-founder and director, YESpay

Craig Borrett, payments manager, Marks & Spencer

Richard O'Reilly, sales director, Magtec

John Rozek, director, PolarMoment

Melissa Law, product marketing director, Servebase

Steve Turner, managing director, Smart Technology Solutions

Alex Rolfe, managing director, Payments Cards and Mobile and Mobile Payments World

Siobhon Watson, head of marketing, Global Payments

Kevin Burns, director, payments, BT

Paul Rodgers, CEO, Vendorcom

Tony Rivenell, head of omnichannel delivery, Waitrose

Andrew Johnson, director general, UK Gift Card and Voucher Association

Alan Smith, head of payments & banking services, Post Office

Tony Shaw, international payments development manager at Tesco

Jeremy King, PCI Council

David Baker, head of card payment innovations unit, The UK Cards Association