Cashless Trends Growing in C-Stores

Payment by mobile phones and smart cards could become the norm in next five years

Published in CSP Daily News

WATFORD, U.K. -- Two U.S. convenience-store chains were acknowledged as setting the pace for payment technologies that will likely become the norm in coming years.

The latest research from international food and grocery industry expert IGD said the next five years will see a marked increase in the development of electronic payment and ordering, as exemplified by ExxonMobil's use of RFID tags and Wawa's order-at-the-pump kiosk service.

According to a new IGD report, Global Convenience Retailing 2007, cashless wave and pay cards [image-nocss] and mobile-phone-based electronic settlement systems are quickly becoming the norm in convenience stores around the world.

Japan is leading the way in satisfying shopper requirements for immediacy, said Adrian Williams, senior business analyst for United Kingdom-based IGD and the author of the report. Most convenience stores offer a payment option that does not require cash or authorization of bankcards, and the rest of the developed world will shortly follow suit, he said. Convenience shopping is becoming more complex as operators evolve to meet changing consumer priorities. Immediacy of purchase is becoming a key consideration.

Technology advances are opening a way for retailers to offer an increasing number of add-on services. Many convenience stores could evolve into local community service hubs,' offering everything from grocery products and collection points for on-line orders to services from non-competing local stores.

How are convenience retailers adopting new technologies?

ExxonMobil uses a form of RFID tagging in the United States and Singapore. Customers attach a tag to their key ring or wristwatch and pay for fuel automatically on a pre-selected credit or cash card. At U.S. c-store operator Wawa, based in Wawa, Pa., shoppers can order customized sandwiches while filling up at the gasoline pump. The UK's Mid-Counties Co-op is testing biometric finger readers, where registered shoppers have credit- or debit-card information linked to their fingerprint. Customers simply press their finger against a reader and their account is automatically debited. According to the co-op, this is 20% quicker than standard chip and pin verification. Last December Barclaycard Transport for London and Visa announced they are teaming up to combine credit-, debit- and Oyster-card (an electronic-ticketing service used by London's rail service) functionality on the same piece of plastic. This will allow Londoners to wave and pay for train tickets and low cost retail items such as coffees and newspapers. In Taiwan, AS Watson has introduced Wave Visa, allowing customers to wave their Visa credit card close to the card reader to facilitate payment. The process is 2.3 times faster than using cash. In 2004, NTT DoCoMo, a leading Japanese telecom companies, enabled its Osaifu-Keitau mobile phones with contactless cards, allowing mobile phones to be used for electronic money, credit-card payment, membership-card identification and as an airline ticket.

The research report Global Convenience Retailing 2007 also makes the following predictions for the future of convenience retailing:

Growth in vending machine sales. Increased fresh-food products and foodservice being offered. Increased joint ventures between convenience and forecourt operators and foodservice providers. More specialized formats targeting specific shopper needs. More electronic in-store media. Mobile phone advertising.

Technology has the potential to redefine convenience retailing, said Williams. This is great news for consumers and presents significant opportunities for retailers nimble enough to keep pace.