Why it matters:
- Spurred on by the pandemic, consumers have embraced contactless payment at retail for the convenience it provides, and retailers have been testing multiple variations, including biometrics—identification systems that use a person’s physical features—such as face scans and fingerprints.
- Retailers such as QuikTrip, Hudson Group and others are also conducting limited tests of cashier-less checkouts that allow customers to literally grab and go.
- Biometric payments have seen increasing deployment at retail, although the technology still presents some challenges.
The pandemic accelerated many of the retail trends that had already been gaining traction before 2020, including how consumers pay for merchandise at the store checkout.
Among the checkout technologies that retailers are testing are grab-and-go solutions that use sophisticated scanner and camera systems that allow shoppers to bypass the checkout entirely, and biometric checkouts that use facial recognition, fingerprint scans, or other physical features to verify a customer’s identity.
These advanced technologies, in test at retailers including QuikTrip, Hudson Group, and Whole Foods Market, provide added convenience for consumers, but also have drawbacks, including the cost of implementation and concerns about privacy.
Meanwhile, “touchless” technology that allows shoppers to tap a credit card or hover their mobile phone over a scanner surged in popularity amid concerns about spreading the coronavirus via surfaces early in the pandemic. Consumers quickly grew to appreciate the convenience of these types of payment, and they have shown staying power.
According to the 2021 Shopper Study from Zebra Technologies Corp., 82% of retail executives said smartphone-based checkout will be one the most important technologies over the next five years, second only to workforce management software. The technology can help retailers minimize their labor costs, speed the checkout process, and provide increased customer satisfaction. In addition, mobile payments can often be tied to loyalty programs, as is the case at Starbucks, Dunkin’, and other digital loyalty pioneers.
Research shows that the use of mobile wallets—which allow consumers to use their smartphones to store their credit cards or other payment methods, such as a PayPal account—have also been growing in popularity.
Apple Pay and Google Pay were the most commonly used mobile wallets in the second quarter, capturing 48% and 17% of in-store mobile wallet checkouts, respectively, according to a report from PYMNTS.com. Mobile wallet payments accounted for only 5.8% of in-store transactions, the study found, but that represented a 29% increase over a year ago.
[Read: Supermarkets and Startups Offer Big Lessons on Driverless Product Delivery]
Among the checkout technologies that retailers are testing are grab-and-go solutions that use sophisticated scanner and camera systems that allow shoppers to bypass the checkout entirely, and biometric checkouts that use facial recognition, fingerprint scans, or other physical features to verify a customer’s identity.
Retailers test cashier-less, ‘just walk out’ checkout solutions
Perhaps the most advanced form of checkout technology, however, is the kind being tested by retailers such as convenience store chain QuikTrip and travel center store Hudson Nonstop. Both are using Amazon’s Just Walk Out technology, which allows consumers to leave without visiting a cash register at all.
QuikTrip in August opened a store in Tulsa, Oklahoma, that was the first in the chain to use Just Walk Out technology. The technology includes a network of cameras and sensors that enable shoppers to literally “grab and go” from the store’s assortment of consumer-packaged goods (CPG) and prepared foods.
“I can’t speak on future plans today, but we are extremely excited about this location and have been receiving good feedback from our customers,” Aisha Jefferson-Smith, QuikTrip’s Corporate Communications Manager, told CO—. “We hope this location continues to be popular in downtown Tulsa.”
Amazon has made the technology a centerpiece of its Amazon Go stores, which the e-commerce giant has been rolling out in several markets around the country.
Hudson, the retailer with more than 1,000 locations in airports and other locations, also recently began testing Just Walk Out at a Hudson Nonstop store at Dallas Love Field.
The store is “one of many to come,” said Evan Schut, Senior Vice President, Hudson, in a video on Amazon’s Just Walk Out website. “Customers are more and more looking for contactless ways to shop.”
Shoppers scan or insert a credit card to enter the store, and the technology then creates a “virtual cart” for that specific customer, he explained.
“The response has been incredibly positive,” said Debra Hayes, Assistant General Manager, Dallas Love Field. “People are very intrigued by it.”
Just Walk Out technology has also been implemented at a handful of other venues, including several sports stadiums in the Seattle area.
The technology has thus far been considered too expensive for many retailers to implement on a wide scale, although costs have been dropping, according to reports.
Other companies are testing similar technology, including Keasbey, New Jersey-based Wakefern Food Corp., a member-owned grocery co-op wholesaler that supplies ShopRite, Gourmet Garage, Fairway Market, and other supermarket chains and independents.
Earlier this year, Wakefern said it would begin testing cashier-free technology from Israel-based Trigo. It marks the U.S. debut for Trigo, which has been implemented in several large European grocery retailers, including Tesco and Aldi Nord.
Shoppers use an app to scan a QR code when they enter the store, then pick up items and leave without having to check out.
“With Trigo's frictionless technology, Wakefern Food Corp. is opening up access to cutting edge innovation for our members,” said Charlie McWeeney, VP of Technology, Innovation, and Strategy for Wakefern Food Corp. “We are excited to pilot Trigo’s solution and offer our consumers the ultimate in checkout convenience.”
[Read: How Top Brands Are Turning SMS Text Messaging Into a Bona Fide Sales and Marketing Channel]
Biometric payment systems like ‘Amazon One’ hold promise, but face challenges
Payment technologies that use some form of biometrics are also gaining traction around the world. In the U.S., many consumers have already become accustomed to fingerprint scanning or facial recognition to unlock their phones or computers, and these types of user authentication methods are increasingly being adapted to payment authentication as well.
Several retailers are in the proof-of-concept testing stage with facial recognition, said Michael Smith, Manager of Sales Engineering, Extended Access Technologies, at HID Global, a maker of identification solutions.
“It’s significantly better today than it was even five years ago, thanks to the artificial intelligence algorithms that have been used to create some really nice recognition models,” he said.
While facial recognition holds promise as a payment technology, Smith said, it’s complicated to implement, in part because of what he described as “environmental challenges” — lighting, masks, glasses, and other variables, such as the height of the person, their distance from the camera, and whether there are multiple people in the camera’s range.
Other considerations are the concerns that consumers may have about facial recognition being used by law enforcement, or the general feeling that consumers may have that they are being “surveilled” when facial recognition is in use.
Fingerprint scanning as a form of payment has its share of complications as well, although it lacks some of the drawbacks of facial recognition.
“With a fingerprint scanner, you almost have to opt in by nature, but with a camera, you never know who’s surveilling you,” said Smith.
In addition to its Just Walk Out technology, Amazon also has been rapidly rolling out a biometric payment system called Amazon One, which allows shoppers to pay using a scan of their palm at checkout. The system has been implemented in dozens of Whole Foods Market locations, which is owned by Amazon, as well as in other retail locations.
Research from identity technology firm IDEMIA found that 74% of consumers worldwide have a positive attitude toward biometric technology, including 79% of consumers under age 49. In addition, the research found that 86% of consumers said they believe fingerprint recognition is secure.
The research explored the opportunities for biometric payment cards, which are credit or debit cards that use a fingerprint reader on the card itself to authenticate the user, rather than a PIN. This technology is seen as an alternative to mobile wallets, which are stored on a smartphone but are viewed as less secure and less easy to use, according the IDEMIA report.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
