The Future of Payment

The Lempert Report
April 30, 2013

With technology always evolving, so too does the method by which we pay for things

With technology always evolving, so too does the method by which we pay for things. But who will cash in on the need to deliver speed, mobility, safety and convenience to shoppers at lower costs to retailers? With so many technologies and security standards competing, retailers are slow to commit to any one, but a few trends are clear: 1. Landlines are on the wane. In Q2 2012, about 80 million adults and 30 million children lived in households with wireless service only. That adds up to 36.8% of U.S. households, says the Center for Disease Control’s National Health Interview study. 2. The use of Smartphones continues to surge. A recent Harris Interactive poll of 2,383 U.S. adults says 61% of consumers feel smartphone payments will replace cards & cash for most purchases. Already, 13% say they’ve paid by tapping their phone against a retailer’s POS terminal or watched someone else do it; among smartphone owners, the figure is 18%. Also, more than half of Wal-Mart’s U.S. customers reportedly own a smartphone. The chain has NCR installing 10,000 self-checkouts in more than 1,200 U.S. stores by the end of 2013. It is also testing the Scan & Go app for iPads in about 200 stores 3. This could be a gateway to Millennials—40% of this age group and 34% of Gen Xers want to pay by smartphone, vs. just 18% of Boomers and 7% of mature consumers, the Harris study says. Retailers may have time to watch the market develop without losing competitive advantage, but they can’t wait too long before integrating mobile into their consumer strategies. According to an RSR Research survey of retailers, 88% say “one of their Top 3 business challenges is consumers using mobile as part of their shopping experience.” And a separate RSR study called, Retail Payments: When the Future is Now, states, “Retailers expect mobile and digital forms of payment to be a dominant form of payment in three years—a tremendous shift. Increasingly they are turning to consumer-focused technology companies like Google and PayPal in the hopes they will take charge.” But what seems to trump all? The uncertainty about the future of payments. According to another RSR finding, 38% of retailers “stuck until some solution to rising processing fees is presented to them.”