Are any alternative in-store payments about to break out?

Source: Kroger promotional video, “New Scan, Bag, Go App,” March, 2021
Jan 03, 2023

After ramping up efforts to reduce friction in the online shopping experience over the pandemic, retailers are now reportedly focusing their investments on the in-store payment process.

According to a recent Wall Street Journal article:

  • Halfords, the UK-based retailer of auto parts and bicycles, is exploring a technology that uses sound waves to enable digital payments via a customers’ mobile device.
  • Kroger is testing smart shopping carts that enable customers to avoid the traditional checkout line, as well as exploring installing checkouts in individual aisles.
  • Nordstrom is investigating payment via mobile phone.

Recent studies show consumers becoming more open to alternative payment methods due to the use of contactless payments over the pandemic.

A survey of U.S. consumers taken in December 2021 by Anyline found 76 percent of scan-and-go users started utilizing the offering because of the pandemic. Of those respondents, 79 percent plan to continue to do so once the pandemic ends. Thirty-two percent cited speed as their first priority when shopping in stores.

Among those not using scan-and-go, the top reasons were privacy concerns, cited by 35 percent; not wanting to go through the process of downloading an app, 32 percent; and the inability to use the app to buy certain products, such as produce and alcohol, 31 percent.

According to Marqeta’s “2022 State of Consumer Money Movement Report,” 71 percent of U.S. consumers surveyed used a mobile wallet in the last 12 months, up from 64 percent in late 2020.

Fifty-six percent felt comfortable leaving their wallets at home and taking their phones with them to make payments, according to the Marqeta survey. Among age groups, 59 percent of 18-24 year-olds expressed confidence with leaving their wallet at home, but only 36 percent of 51-65 year olds felt the same.

A Morning Consult survey taken in December 2021 identified some payment methods not gaining significant traction, including sending a payment directly through a social media platform, only 23 percent doing so; buying something within a game or virtual reality, 19 percent; paying for something using a wearable device, 12 percent; and shopping at a “just walk out” store, 11 percent.

DISCUSSION QUESTIONS: Will scan & go, smart carts, mobile payments or any other alternative payment method gain significant traction in 2023? Will most payments at the store level likely be made via traditional staffed cashiers and self-checkout terminals well into the future?

Please practice The RetailWire Golden Rule when submitting your comments.
"Contactless, cardless and mobile payments are on a high-growth trajectory, and I just don’t see anything but more growth ahead in 2023."
"The elephant in the room still has to be RFID which has promised so much for so long but still not delivered to its potential."
"I believe many consumers (perhaps younger ones?) will find these options more convenient and faster."

Join the Discussion!

13 Comments on "Are any alternative in-store payments about to break out?"

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Nikki Baird

I think tap to pay will be the breakout payment innovation in 2023. I’ve also heard it described as “tap on glass” too. At a time when current payment devices are rapidly running out their PCI lifespan, the idea that you could add mobile to your stores without having to add payment devices is a huge potential cost savings for retailers — and a quick, easy fairly contactless option for consumers.

Richard Hernandez

Yes agreed. I can’t tell you how much easier tap to pay has made transactions at retailers or restaurants. I would also like to see more businesses use digital card services like Apple Pay. To be able to not have to carry any cards makes life easier.

Dave Bruno

Contactless, cardless and mobile payments are on a high-growth trajectory, and I just don’t see anything but more growth ahead in 2023. Every day, more and more young people who grew up with social media become consumers, and every day those new consumers will add to the ranks of people who simply expect contactless and cardless payments. At the same time, more and more of us among the “older” generations will become more comfortable with the technology and user experience. Additionally, I expect that traditional checkout experiences will continue to fade in all but the high-touch selling categories.

Ken Morris

Mobile payments will continue to increase as the phone is the new wallet. We have more and more functionality being added to the phone, and this will just continue. I think a frictionless customer journey is what most retailers are striving for and what their customers crave, and its pace will just quicken — as this pandemic is not ending soon. 

Basically, the in-store payment experience is key to shopper satisfaction. Retailers should be thinking about this in terms of brand engagement. For my particular brand, what should checkout feel like? For that 19 percent who seem fine with living within the Matrix, VR is the way to go. But for Boomers, they wanted their MTV then and they still want their wallets to be, well, just wallets.

Katie Thomas

Consumers will likely have differing points of view on alternative payments, similar to self-checkout. Some consumers love self-checkout, others feel like they are doing the work.

It will be similar with scan and go and the perceived effort on the part of the consumers. That said, I believe many consumers (perhaps younger ones?) will find these options more convenient and faster.

Gene Detroyer

Katie, you identify one of the hurdles of scan and go. It adds a step every time the shopper takes an item off the shelf. That is a lot of effort to avoid the cashier.

Georganne Bender

There are so many other issues with shopping physical retail, like customer service and the state of the sales floor, I wish retailers would pay more attention to solving. How many payment options do we need? That Kroger smart cart does sound cool though.

Shep Hyken

It’s only a matter of time before people no longer need a wallet. Retailers will have to find ways to serve those that don’t have the technology. Regardless, we’re moving into the era of a cashless payments becoming the norm. I’ve seen customers become upset with retailers that aren’t set up for payments with a phone/mobile device. The future – in the next few years – will see more self-service options and less traditional cashiers – basically a reversal of what is typical today. In 10 years, a traditional cashier (by today’s standards) will be rare, if not obsolete.

Brandon Rael

Removing friction from the checkout and payment processes should be a high priority for all retailers, grocers, hospitality, and restaurant businesses. We have seen the emergence of tap-to-pay, Apple Pay, QR codes, and other digital-first methods to accelerate the checkout process, and we should expect the momentum to build throughout 2023.

There are both customer experience enhancements and cost and efficiency savings for retailers and other companies with touchless commerce capabilities. However we should temper our enthusiasm for smart carts and walk-out Amazon technologies, as there are significant costs associated with scaling these capabilities out. Society is rapidly shifting to a cashless model, which seems to be a more culturally accepted phenomenon, with the smartphone at the center of the universe.

Gene Detroyer

The specific options may be different for different types of retailers. Scan and go in a supermarket just seems annoying. Smart carts and Amazon Go solve that issue. Scan and go in a department store seems like a great way to avoid the slowest checkout process in retail. Several large cities have developed scan and go systems that have eliminated the need for anything but a smartphone.

My first experience with a cashless system was in China, where everything was paid for by phone. Yes, even the beggars on the sidewalk. The only people who needed cash were those who could not open a Chinese bank account. Today some banks in China do not accept or dispense cash notes.

Andrew Blatherwick

The growth and acceptance of tap and go technology will continue as it delivers fast efficient service for the consumer. In restaurants pay at table and self-checkout at table using QR codes are also increasing in the UK particularly. They are all likely to continue to grow as customers gain confidence in using them. The elephant in the room still has to be RFID which has promised so much for so long but still not delivered to its potential. Will 2023 see it happen?

Craig Sundstrom

It’s becoming more common — or at least less uncommon — right now; so perhaps we really mean when will it become universal?

I’m not sure; nor am I sure it’s particularly important (except perhaps to RW, who seems rather obsessed with it)
The movement away from cash — i.e. to credit and debit cards — was a quantum change in how people paid, since it eliminated (or reduced) a large-risk and handling cost; how people pay cashlessly is less important.

Anil Patel

Customers want ease and convenience when they shop, so alternative payment methods will undoubtedly become more popular in the future. In my opinion:

1. More payment apps, such as Venmo, will enter the market.
2. Tap and pay with credit cards or contactless debit cards will also become more mainstream.

Furthermore, when it comes to investments, I believe retailers should consider the potential ROI of investing in new technology. Kroger’s smart shopping carts, for example, appear to be a game changer. Will the benefits, however, outweigh the financial investment required to implement and maintain these carts?

"Contactless, cardless and mobile payments are on a high-growth trajectory, and I just don’t see anything but more growth ahead in 2023."
"The elephant in the room still has to be RFID which has promised so much for so long but still not delivered to its potential."
"I believe many consumers (perhaps younger ones?) will find these options more convenient and faster."

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