Magazine Article | October 18, 2006

Payments Reality Check

Source: Innovative Retail Technologies

Paper, plastic, radio waves, fingers … how would you like to pay for that?

Integrated Solutions For Retailers, November 2006

I’m thankful for new technologies like biometrics, RFID (radio frequency identification), and RFID’s cousin NFC (nearfield communication). Retail applications are developed for them, and these give editors fodder for prognostication. Those technologies keep this job interesting, and with apologies to certain peripheral hardware vendors, they ensure we’ll have more to write about than pole displays and cash drawers.

The aforementioned technologies all have received press for multiple retail applications including physical security, supply chain optimization, and time and attendance. But the one I want to discuss here is payments, and more specifically, the problem I see with the adoption of these technologies as payment methods at the consumer-facing side of the POS. The problem is store-level execution, or the lack thereof.

The Consumer Is The End User

These technologies as payment options are unique because they’re both consumer technologies and retail technologies. That means that as payment vehicles, RFID, NFC, and biometrics all require retail-level and consumer-level adoption. Problem is, who’s pushing consumer-level adoption? Certainly not the average store associate, the main (and often only) point of interaction the consumer has with the store. Except in rare cases of profound initiative or boredom due to a lack of store traffic, the POS attendant at a grocery store has little or no incentive (much less patience) to teach biometric or RFID payment applications to shoppers. That is, if they’ve adequately learned the application themselves.

I’m not a naysayer. I believe in the potential advantages of contactless payment (speed, convenience), and I believe in the potential advantages of biometric payment (speed, convenience, and no currency, plastic, or fob to carry). These technologies offer consumers more payment options, and what American consumer doesn’t like to have choices? But if you’re seriously contemplating adding any of these technologies to your payment acceptance repertoire, consider the significant investment you’ll have to make in educating your associates and inciting them to share the technology with your consumers.

I recently discussed this topic with J.D. Oder, cofounder of payment processing services provider Shift4. He suggested introducing the technologies to your associates in a more controlled environment first. For example, implement biometric technology at the POS for physical access security and/or for time and attendance. Your associates are a control group with little choice but to use the technology. Once they’re comfortable with it and see its advantages and realities, they’ll be more likely to share with your customers the advantage of leaving their wallets at home and paying with a phalange.