Unattended retail struggles with mobile payments acceptance
Editor's note: This article originally appeared in Kiosk Marketplace, a Mobile Payments Today sister publication.
Should operators of unattended retail equipment invest in mobile payments?
Figures are not available on the rate of mobile payment adoption for unattended retail equipment. However, informal input provided by kiosk operators and manufacturers to Kiosk Marketplace in the past year has indicated the rate of adoption has not kept pace with that of attended retail locations.
Evan Jarecki, vice president of sales and co-founder of Gimme Vending LLC, which provides technology solutions for unattended retail equipment, addressed operators' concerns about mobile payments during the National Automatic Merchandising Association show at the Las Vegas Convention Center last week.
Jarecki said it is important for operators of unattended equipment to recognize that mobile payment continues to expand. In two years, he said, mobile payment will take the automated retail industry by storm.
Why operators resist
Most operators recognize that the younger generation is comfortable with mobile payments, Jarecki said, but many believe older consumers still prefer payment cards and cash.
"Mobile payment is the fastest growing way to pay," Jarecki told his listeners, and the change isn't restricted to millennials and Gen Zers. He said that the majority of the workforce up to age 65 now owns a smartphone. About one-third of Americans bought an iPhone last year, he said, adding that mobile payment sales will be a $3 trillion industry by 2022.
"The majority of people are using online stores rather than brick-and-mortar stores to buy gifts," he said.
Jarecki acknowledged that many unattended retail equipment operators continue to resist offering mobile payment. Many vending operators, for example, say that their customers will not use mobile payment.
While not all customers will use mobile pay, Jarecki said it makes sense to give customers as many payment options as possible.
"You have the ability to control the buyer's journey," he said.
More convenient, faster and more secure
Jarecki said the mobile payment process is more convenient for the customer buying a product from a machine. If a customer goes to a machine and sees a product they want to buy but the machine only accepts cash, he becomes frustrated and leaves if he doesn't have the cash on hand.
If the machine accepts a payment card, the transaction still takes longer than a mobile purchase, during which time the customer could have second thoughts about the price they are paying for the product. There is also the chance that the card payment device will malfunction, resulting in customer frustration.
The mobile payment option, by contrast, results in a fast and satisfying experience, Jarecki said. There is no interruption of activity, no time for second thoughts about the price, and no chance of mechanical equipment malfunction as there is with cash or a payment card.
Mobile is also the most secure payment option available, he said. Any form of physical identification, such as a credit card number, can be lost or stolen, Jarecki said. The number can be stolen on a physical receipt or hacked from a computer file.
Mobile devices equipped with near field communication, known as NFC, are more secure than payment cards, Jarecki said. NFC devices allow a customer to tap the device against the machine to transmit the authorization data. NFC data is protected by encryption — the translation of data using a private code.
Encrypted data is protected through "token identification," which includes the use of a password-protected code. Tokenization gives each transaction a unique, one-time account number. The data that gets transmitted is unique to that transaction, so if the one-time account number is stolen somehow, it's useless.
NFC currently uses the same security standard as EMV, which credit cards use to prevent fraudulent transactions.
Jarecki expects NFC to become the dominant mobile payment technology since it is fast, secure, and there is no chance of losing connectivity as there is with Bluetooth.
Faster payment technology may emerge at some point, he said, but he expects NFC to last a long time.
Mobile's popularity continues to grow
Fast food chains are popularizing mobile payment apps, he said. Dominos Pizza now uses push notifications to alert customers when their pizza is entering the oven.
Amazon Alexa, a virtual assistant, is also driving mobile adoption, since even people who are not tech-savvy can use it, Jarecki said. Alexa enables voice interaction, music playback, making to-do lists, setting alarms, streaming podcasts, playing audiobooks, and providing weather, traffic, and other real-time information
Mobile loyalty reward programs offer a good way for merchants to introduce mobile payments, he said, considering that loyalty programs are becoming more popular.
Kiosk operators cited integration with remote order-and-pay as a top promising technology, according to the 2018 Kiosk Industry Census, which ranked it 3.17 on a scale of 1 to 44, behind remote management (3.92), touchscreens (3.42) and data analytics (3.33), and on a par with cloud technology.
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.