A few months ago I was in London with my family and I wasn’t allowed to use my credit card in a retail shop.
There was no security “chip.” Chip? Don’t ask – for years, American card issues have been relying on magnetic strips instead of security chips because it’s less expensive. The good news is they’re slowly coming around. But who cares anyway? The point is that I couldn’t use my credit card and had to pay cash. Why do I even have this headache anyway? Back in the states some stores require my signature, others don’t. As a consumer I just do what’s told but in the back of my mind I’m thinking: Why is this? More importantly, and annoyingly, why am I using a credit card in the first place? Why do I have to carry around multiple pieces of plastic in my wallet that can be lost or destroyed? Wait…why am I still carrying around a wallet in this “digital” age? Can’t this all information be stored and delivered by smartphone, a device that seems now permanently attached to me anyway? The answer is yes. But unfortunately I’m not doing this because it’s confusing and complex many retailers aren’t on board. But this month, that changes. You’ve probably heard by now that around October 20, rumor is that Apple will finally release its latest iOS operating system that will include Apple Pay, a mobile payment service that uses NFC (Near Field Communication) technology to enable you’re your retail customer, to pay without a credit card. This will change my life significantly over the next few years. But if you’re a retailer, your business life will change massively. How? Here are four ways.
Your Point of Sale (POS) system will be different.
You will be buying an inexpensive reader so that your customers with iPhones (and…don’t worry…Android phones too, because NFC technology is in both) can tap their devices to complete payment. These devices will likely not only be at the old-school cash register but placed strategically throughout your store so customers can tap and pay wherever they are. Your POS systems will also recognize customers when they come into your store using either iBeacon or Bluetooth Low Energy connections so that they can be enticed with coupons too. Gone will be your cash register. Gone will be credit cards. Your customers will scan items off the shelf with built in bar code readers on their smartphones, use the coupons you smartly sent to them and use Apple Pay to finish the transaction.
You will reduce your security exposure.
As a retailer, you have security risks. Just ask the IT teams at Home Depot, Target and Michaels. You’re collecting and storing your customers’ credit information and could be subject to liabilities if this information is breached. In future, devices using Apple Pay (and similar NFC payment based applications) will be using enhanced security, using fingerprints and even facial recognition. Nothing is foolproof of course and hackers will always find a way to do what they do best. But applications like Apple Pay will help fight that challenge. That will help your customers and reduce your liability.
You will be able to better target your customers.
When a customer pays with their smartphone more than just payment information can be collected. Collecting customer data has always been a burden to the typical retailer. But no more. With Apple Pay, you’ll be able to (with their permission) gather more information about them (i.e. address, email, location, etc) and the type of products they buy. This information will be easily brought into your accounting and customer relationship management (CRM) systems so that you can reach back out and better target your marketing to those customers. It’s a win-win: you will improve your messaging and customers like me will only get emails and texts containing offers, coupons and other information about stuff of which we have a genuine interest instead of a lot of noise.
You will see a reduction in your overhead.
As more and more of your customers are opting to use Apple Pay and other similar applications you’ll find yourself needing less people to ring up sales, answer questions, interface with customers and do your accounting. We’re already seeing this in popular chain restaurants like Chili’s and Uno’s where kiosks on tables are allowing customers to order and pay for their meals without human interaction. There is, of course, no substitute for the personalized help that an employee can provide to a customer who needs it. But in future you will simply be needing less employees. Data about your customers will be more easily integrated among all of your systems so that you can analyze and communicate with them in less time. All of this will serve to reduce your operating expenses and increase your margins.
Apple Pay will open a floodgate of customers like me who have for years been eager to rip up our credit cards and truly use our smartphones as payment devices. It will change the way your customers interact with you. And it will change the way you do business in the years to come.