How smartphones may blow up the way customers shop, pay and fall in love with your c-store brand
The imminent confusion brought on by mobile payment is forcing companies to change, with many actively choosing to reposition themselves. Duluth, Ga.- based NCR Corp., for example, acquired two companies late last year to help evolve its ATM and mobile-solutions services.
The company has grown from its history as an ATM company, in recent years having acquired two POS and software firms with roots in the c-store industry. Bill Nuti, NCR’s chairman and CEO, called its recent growth part of a “deliberate and thoughtful strategic agenda to profoundly reinvent the company.”
The larger goal is to become more of a turnkey, one-stop provider for financial transactions, be it with ATM functions or mobile payment, says Mark Critchett, director of marketing and strategy in NCR’s financial services business.
“A lot of our success is in the convergence of physical and digital channels, and we see that across all industries,” he says. “We do it in banking and in travel with mobile boarding passes … so we’re follow that same strategy.”
As suppliers jockey to best position themselves for the new era of mobile, many of the big players—including credit-card companies, phone carriers and mobile wallets—are doing so as well, Taylor of PCATS says.
A pivotal battleground will be in ownership of what he describes as the “secure element” embedded within the phone that will hold an owner’s identification. In different emerging business models, the phone carrier, card issuer or bank may ultimately achieve ownership of that part of the transaction. Taylor describes a scenario whereby retailers may have to “buy back” their own data. Fortunately, moves have been made to circumvent the ability for any one company to own that secure element, he says.
The question over data ownership is in part what drove many retailers to form their own mobile-wallet initiative, he says.
More than a year old, the Irving, Texas-based Merchant Customer Exchange (MCX) involves retailers such as Walmart, Target and Best Buy, but also c-store chains including Alon Brands, Wawa and RaceTrac. “Who better to own the data than the merchant, who knows what our consumer wants because we’re living with them day to day?” said Will Alexander, vice president of information systems and special projects for Atlanta-based RaceTrac, who spoke as a panelist at CSP’s Outlook Leadership conference in Scottsdale, Ariz., last fall. “We think we can provide a better solution.”
While the topic of mobile in the c-store space can spark any number of talking points, the winners will home in on what matters. And by all accounts, central to everything—beyond technology, logistics, even consumer acceptance—will be the brand: what it stands for, what it delivers, how it morphs to stay tenaciously and defiantly relevant.
As Starbucks has shown, the ability for any one brand to gain credit for the mobile experience in the consumers’ mind is completely up for grabs, says Hewitt of Mercator. But it’s up to the retailer to develop and execute a seamless plan.
“Until the consumer can begin to see value of not pulling out a physical wallet … that’s where you’ll see inroads,” she says.
For Banks of Cumberland Farms, the near-term reward is more obvious. “It does reduce the iron-clad dominance of the credit cards,” he says. “Interchange fees are our second biggest expense, so anything that makes that a level playing field is important.”
Types of Mobile Wallets
To help retailers understand the emerging types of mobile wallets, Boston-based Mercator Advisory Group reviewed several current business models and categorized them into five groups:
▶ Card Containers: These products passively store a consumers’ payment and loyalty card numbers as a form of backup.
▶ Card and Credential Containers: In addition to holding payment and loyalty card numbers, these products automatically fill in merchant checkout pages with the proper credentials.
▶ Digital Bank Accounts: Used primarily for bill payment and point-to-point payment using smartphones. These accounts typically don’t offer mobile shopping abilities.
▶ Mobile Payment Products: These products access a customer’s payment account offered by a single merchant or merchant aggregator, such as the PayPal or Starbucks models.
▶ True Mobile Wallets: These provide interactive access to a variety of credit or debit cards for use at the POS.