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Inventive Payments: the future is now?

Jelle Jansma

New types of inventive payments, in which human interaction during the payment process is very limited or virtually non-existent in order to improve the customer experience, are quickly developing and examples are popping up worldwide. In the (near) future, these frictionless and invisible payments are likely to be the new standard in supermarkets, restaurants, and other stores. With the current health crisis providing an additional trigger, next to the existing focus on technology and digital transformation, discussions are multiplying about our payment behavior. That is why this is a great moment to design and introduce new innovative payment solutions that further reduce frictions for transactions. We zoom in on the retail (supermarkets in particular) and food service industries, to explore both existing and potential use cases.

Retail industry: leading by example

Many innovations in the world of frictionless and invisible payments come from the retail industry. One of the best-known examples globally that has been getting a lot of media attention is Amazon Go with its own convenience stores equipped with “Just Walk Out” technology. This technology is driven by machine learning and AI and recognizes when a customer takes products from or returns them to the shelves and automatically tracks this in a virtual shopping cart. When you have everything you need you can simply leave the store – your Amazon account is charged afterwards. Amazon also has an offering for this technology where customers can use their credit card to enter the store and seamlessly leave the store, the credit card is then charged afterwards.

A great example in the Netherlands is the result of a co-creation between Dutch retail giant Albert Heijn (part of the Ahold Delhaize Group) and ING. In September 2019, Albert Heijn introduced a new type of “AH to go” convenience store at their headquarters in Zaandam. Customers (or in this case, employees) can grab their products and then leave the store and pay seamlessly by tapping their card or phone to the payment screen at the store exit, and enjoy a frictionless payments experience. A year earlier, Albert Heijn already claimed to have a “European first” with their “Tap-and-Go” concept, which allows customers to tap the shelf (with a special card or smartphone) of the products they want to buy and pay by simply leaving the store.

At the heart of these solutions is sophisticated technology, which makes you wonder what else is possible in the retail industry. Making use of facial recognition (already started in China, Dragonfly by Alipay is a good example) or other biometric characteristics during “check-out” and combining this with the existing shelf tracking technology used in the examples above could be the next big thing in payments in Europe. These and other new payments use cases are also mentioned in the World Payments Report 2019 (see figure below).

Restaurant and food service industry: new developments

Another industry in which the payments process can be enhanced by frictionless and invisible payments is the restaurant and food service industry. By simply looking at the current average lead time regarding the payment and general turnaround times of tables in restaurants we can see that there still is a lot of room for process improvement. There are, of course, many ways in which payments can improve the dining experience, as 38% of goers would still rather not wait for a bill at all and 67% of restaurant owners prefer an “invisible way to pay.” Currently, we already see that non-cash payments are growing faster than cash payments, which is aiding this process.

Perhaps ahead of its time, Barclays came up with a solution that is well-suited to the current social distancing environment. Barclays came up with the so called “Dine & Dash” solution, which might sound like leaving without paying, but this couldn’t be further from the truth. The solution comes in the form of a totem and allows clients of a restaurant to “tap” the device once they are seated and leave straight after eating.

A potential way to integrate the new way of paying entirely in the customer experience is by introducing a voice command within the system. With their voice assistants Siri, Google Assistant, and Alexa, Apple, Google, and Amazon, have paved the way for this technology to become more widespread. In the restaurant industry, this will reduce interaction between waiters and dinner guests, reducing the lead time between the kitchen and the guest and potential errors.

Conclusion and way forward

Frictionless and invisible payments are set to revolutionize payments in the retail, restaurant, and food service industries. Although truly invisible payments are still on the horizon, the first pilots are being run and technology is moving fast. Technologies such as machine learning, IoT, AI, voicebots, and biometrics can create opportunities for companies to innovate further and come up with truly invisible payment solutions. It will be interesting to see which type of companies will seize this opportunity: retailers, BigTechs, or the more traditional payment providers. If you want to know more about the opportunities that these trends and technologies have to offer for your organization, please contact us for more information and read more about them in our recently published World Retail Banking Report 2020.

This blog was co-authored with Michiel Kok. To continue this conversation, connect with me or Michiel on social media.