Verifone - Mobile Payments Innovation
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White paper discussing Verifone's role in mobile payments...
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White paper
HOW tablets and smartphones will
revolutionize retail
Reimagine retail with VeriFone NFC and mobile solutions
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introduction Retailers will soon have to change the way they look at their point-of-sale (POS) estates. In an age of mobile commerce, where consumers can shop with their smartphones inside your own store, get reviews, product information and perhaps even better prices somewhere else, a retailer’s POS infrastructure is the main weapon to reach consumers in store and the best chance to influence behaviour favourably for a purchase. Few would argue that payment technology now plays a powerful role in retail strategy. But while transaction speed, security and reliability are increasingly vital, they come at the end of a shopper’s journey when most decisions are already made and the chance to influence a consumer has mostly passed. As retailers look to engage with today’s more mobile-orientated convenience-focused consumers, most accept that multimedia, touch screens, self-service and mobile- and tablet-based retail platforms are all now crucial to their long-term success. And most also realize that the communication with a consumer’s own smart device will be essential in the future. But while many retailers today have consumer mobile apps for smartphones, these are usually not much more than online catalogues, unable to communicate to retail systems in store and leverage the consumer’s presence in a meaningful way. That will soon change as Near Field Communications (NFC) is adopted by major phone manufacturers and millions of phones reach consumers equipped with mobile wallets and mobile apps enabled for commerce. Retailers may finally be able to connect directly to the consumer’s mobile phone while in store and use that as a tool for customer loyalty and service enhancement. And, that will be combined with a new generation of mobile payment devices based on consumer tablets and other smart devices that complement the countertop POS. These devices will allow associates to take the checkout, the entire back-office and online presence of a retailer right to the consumer, anywhere in the store. The opportunity for exciting, new interactive sales tools, personalized promotions and integrated cross-channel marketing is endless. Industry leaders are already implementing the latest POS innovations to deliver better customer services, sales tools and support. And these leaders view their POS estates as POI estates, their main point of interaction with consumers. The challenge for retailers will be to overcome integration complexity to harness and use new technologies successfully without compromising key store operations and security that run through the POS infrastructure. VeriFone has been leading the mobile revolution in retail systems and is your best guide on this journey.
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Co n t e n t Reimagining Retail
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Leveraging Consumer’s Smartphones in Stores
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Mobilizing the POS
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The Power is in the Apps
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Six Steps to Reimagining Retail
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Conclusion
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Reimagining Retail
outfits without undressing or waiting for access to fitting rooms. With built-in, touch-screen technology, these screens also allow
Traditional stores remain the engine that drives the retail
customers to scroll through options, select and order for fast and
industry. However, society’s rapid adoption of online shopping is
easy payment/collection at the register.
fast shifting consumer expectation as to what constitutes a store. Younger consumers simply don’t distinguish between physical
But custom technology innovations like these, while appealing,
and virtual channels the same way that older generations do.
can be expensive and difficult to implement. Most retailers have
Consequently, retailers need to redefine the in-store experience
concluded that the most efficient way to reimagine the retail
in order to stay relevant. They can no longer target 21st century
experience is by leveraging their existing technology investment.
consumers with 20th century stores and technology.
The POS infrastructure is still a retailer’s biggest IT investment.
To compete with e-tailers, traditional brick-and-mortar retailers
In a recent research study, Boston Retail Partners shows that
need to find innovative, new ways to link the virtual and physical
retailers have two main targets for expansion of its capabilities.
experience, and major trials are already under way. In fashion
They want to leverage a shopper’s own smartphone for payment
outlets, mirror screens can now function as life-size tablets—
transactions at stores and they want to turn the POS mobile and
allowing customers to choose and view themselves in different
bring it to customers anywhere in the store.
POS Platform Expansion:1 Mobility is Top of Mind 47%
46%
68%
50%
22%
78%
80%
7% 11% 4%
12% 8%
19%
17% 13%
4%
15% 23%
52%
8% 12%
38%
23%
15%
12%
8%
7%
Centralized POS platform
Centralized platform
Thin client
Shoppers’ smartphones utilized for checkout
Mobile POS
Already implemented
Plan to implement in 2 years
Software as a service
Cloud or virtual POS
No plans to implement
1 Boston Retail Partners 13th Annual POS Benchmarking Survey, January 2012 – North America-based retailers
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Leveraging consumers’ smartphones in stores
For instance, in some cities they are experimenting with full wall billboards that act as convenience stores. Commuters simply use their phones to scan QR codes on the food item they want as they
In many countries today, there are already more
walk by. After completing the mobile transaction, their groceries will
mobile phones than people. Smartphones are replacing
be delivered and waiting for them when they get home.
PCs for online browsing. According to PayPal, in the UK alone, 14 million adults regularly shop via mobile, and consumers will
Consumers can scan these 2D barcodes with their mobile
spend £2.5 billion shopping on their mobiles in 2016 – a growth
phone camera so they can be directed to product info, an
of 42% each year2.
advert, voucher or special offer. According to a recent consumer survey from TolunaQuick, 19% of consumers have
The ability of mobile to transform the retail experience is immense.
already scanned a QR code, and if the 4549% increase in
Not only does it enable consumers to shop on impulse wherever
uptake between 2010 and 2011 is any indication, they will
they are, but by connecting to the Internet, they can use their mobile
continue to be a dominant force in 20123.
device while in store. This leverages a retailer’s powerful back-end and online presence and allows consumers to purchase heavy items
The drawback of QR codes is the inherent lack of security in its
with free delivery, or find items that might be out of stock.
transactions. QR codes have no embedded security features and can easily be counterfeited by simply pasting a new
Mobile also makes them susceptible to impulse purchases,
barcode on top of an old one. That limits their applicability and
particularly with the increasing prevalence of location-aware smart
the scalability of business cases. But, new technologies can
devices. Companies such as Groupon, where stores grant discounts
take this model to a complete new level.
if enough people sign up for them, and Foursquare, which offers price cuts to users who check in at specific locations using their
NFC and mobile wallets revolutionize commerce
smart devices, are already exploiting these cross-over platforms.
NFC technology is being integrated into mobile phones and is being deployed in record numbers around the world. Leveraging
Mobile as the bridge between online and physical world
smart card and contactless technology, NFC enables consumers
Many retailers are now trying to leverage mobile by deploying
to simply wave the phone at a NFC-enabled payment device to
their own consumer mobile apps for smartphones and
transfer information instantly and securely. According to IMS
customized mobile websites. These work as an extension of
Research, global shipments of NFC smartphones should reach 80
a retailer’s online presence. Consumers are able to browse
million during 2012 and by 2016, 700 million units should be
through the retailer’s mobile websites and even order
shipped every year, according to Berg Insight4.
products online.
All these will have the ability to wirelessly exchange information
The problem with these apps is
and make financial transactions in stores and online—
that they have no connection
effectively turning the mobile device into a digital wallet. Web
with the physical world. In this
giant Google launched their NFC-enabled wallet in 2011 lining
field, retailers have been
up major retailers including American Eagle Outfitters,
experimenting with QR codes.
Bloomingdale’s, GUESS, Macy’s and Toys“R”Us. All were
With QR, retailers can QR codes show the way for physical connectivity of mobile, NFC will revolutionize it.
enabled to accept Google Offers, mobile loyalty and payments
effectively create stores in
sent via consumers’ mobile phones, in addition to payments via
physical locations without any
MasterCard’s contactless PayPass system.
product at all.
3 Source: eConsultancy 2011 online survey - UK 4 Source: Shipments of NFC-enabled handsets reached 30 million units in 2011, March 26, 2012, Berg Insight
2 Source: The UK Mobile Retail Study, 2011, PayPal
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Meanwhile, phone carriers AT&T, Verizon Wireless
NFC technology gives merchants the potential to
and T-Mobile, also in the United States, have
build smart applications and NFC-enabled
formed a mobile commerce venture called Isis that
services around their payments platform.
start deploying millions of NFC mobile phones with
Combining NFC technology, mobile apps and
their own mobile wallet starting in the summer of
integrated back-end systems, payments will open
2012. Isis has forged relationships with all four
the door to a new era of micro-targeted, one-to-
major payment networks and major issuing banks
one selling and loyalty applications.
such as JPMorgan Chase, Capital One and Barclaycard US.
VeriFone: The leading enabler of NFC and mobile wallets in retail
The appeal of NFC and mobile wallets is a global
VeriFone has taken a front-row seat during the
one. Mobile phone operators in multiple countries
latest developments in mobile technology.
are gearing up for the deployment of NFC wallet payment around the world. That includes most of
NFC Mobile Wallets promise a new level of interaction between merchant and consumer.
VeriFone powers 12 of the 14 retailers that launched Google Wallet in the US, enabling Google offers and loyalty at the POS. VeriFone
the big global mobile telcos such as Vodafone, Telefonica, Orange and T-Mobile. Europe is the region with
is working with all leading wallet brands globally including the
most commercial launches and roll-outs planned, including the
Isis mobile payments joint venture, to make sure consumers
United Kingdom, Turkey, Poland, France and Spain. Asia is
will be able to pay and redeem offers.
not far behind with developments in Singapore, South Korea,
The VX Evolution payment devices are all NFC/contactless
China and Japan.
enabled—ready to switch on new capabilities as soon as
All mobile wallets offer retailers the ability to reach consumers
retailers need it. What’s really exciting is what retailers, and
anywhere with location-based and personalized promotions and
particularly their marketing departments, will do with these
offers. The intuitiveness of “touch-and-go” NFC communication
consumer-focused payment solutions. The VX Evolution devices
allows for faster reads of tags than QR codes, but most
also incorporate full-colour touch screens with multimedia
importantly the embedded security of NFC technology allows
capability, fast processing and optimsed memory – everything
retailers to deliver significantly more value to consumers.
needed to show video, deliver promotions and communicate
Retailers will be able to drive traffic to stores via targeted and
other digital platforms in a meaningful way.
location-based promotions using NFC-enabled smart media and
In addition, VeriFone delivers a full suite of tools for NFC and
posters in malls and other high-traffic areas. Opportunities in
mobile wallet acceptance at the POS, which is essential when
store are just as exciting.
retailers need to
In the next few years, consumers will start to see smart posters
manage multi-
and NFC shelf tags strategically placed around the store.
function wallet
Customers will be able to collect points, validate promotions and
applications and
receive retail alerts direct to their phones as they walk through
handle mobile
the store or venue. NFC will also make redemption of vouchers
offers, coupons
and coupons at the POS fast and hassle free. All of this will
and promotions in
allow retailers to get closer to their customers.
multiple formats in addition to
Once NFC takes hold, it won’t be long before retailers begin to
payments.
leverage its ability to put their brands into consumers’ pockets.
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VeriFone enabled 12 of the 14 retailers that launched Google Wallet with mobile offers, loyalty and payment capability.
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Mobilizing the POS Retailers are implementing mobility right now to improve customer service and store processes in multiple areas and functions: Store Associate Mobility Plans5 3%
3% 13% 7%
31%
3%
13%
28%
31%
22%
28%
20%
2% 12% 9% 9%
25%
19%
30% 10% Mobile POS with tender
Currently using
Inventory management
13%
14%
19%
Task management
Line busting with suspend
Messaging
Within 12 months
12-24 months
9% HR
24-36 months
A mobile POS enables retailers to improve customer service instantaneously by bringing the POS to the consumer anywhere in the store, as well as reducing the overhead and expense of purchasing additional registers. And, that’s just the start. Once sales associates are equipped with advanced mobile technology at their fingertips, retailers can attack multiple fronts simultaneously. On-the-spot inventory management, up- and cross-sales, customer loyalty and much more made possible with an advanced technology solution in the hands of associates. Retailers are able to radically improve the store experience, selling the same products with the same sales force as before.
5 Source: RIS/IHL Group 2012 Store Systems Study – North America-based retailers
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Retailers want the latest consumer devices enabled for enterprise use
Retailers need enterprise-ready consumer devices
When asked which systems retailers want to deploy, retailers
backbone of store operations. They need to have 100%
are categorical. They do not want the old, clunky systems of
confidence that new devices added to this infrastructure will run
yore with poor user interface and connectivity and usually single-
seamlessly with existing systems and will not disrupt store
use applications. Retailers want the latest in consumer gadgetry
operations in any way. Retailers are also anxious about the
adapted to their own needs. And, tablets and smartphones are
durability of tablets and other smart mobile devices in a rough
on top of their list.
retail environment.
The challenge for retailers is that their POS infrastructure is the
Operating Systems Preferred by Retailers6
Points of Concern to be Addressed on Network-Enabled Tablet Deployments in Retail7
71.7%
Apple iOS
58.5%
Windows Google Android
64.2%
Device security Enterprise security
49.1%
64.2% 58.5%
PCI compliance
Blackberry
13.2%
ROI/total cost of ownership
webOS (HP)
7.5%
Managing multi-use by associates Break/fix device maintenance Loss caused by audit
One of the main advantages of using popular consumer devices
Shrink caused by theft
is that the young and trendy consumers that love smartphones are the same people who work at retail stores. They are used to
Users downloading insecure apps
these devices, and that cuts down on training. Also, popular operating systems of leading tablets and smartphones have established app developer networks, making it easy to expand Especially important for retailers is the need for security and the
the capabilities of the device in the future.
assurance that the new, consumer-based devices will not open
And then there is the “wow” factor. With multimedia capability,
the network to attack, which could be extremely damaging to a
colour touch-screen displays, cameras and wireless connectivity,
retailer’s image and pocketbook.
tablets make the ideal sales device for staff. The really clever part is integrating this mobile functionality with in-store stock systems, payments platforms and fashion-specific applications.
6S ource: RIS/IHL Group 2012 Retail Embraces Tablets Study – North Americabased retailers
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7 Source: RIS/IHL Group 2012 Retail Embraces Tablets Study -– Leading US-based retailers
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There could be new training
PAYware Mobile Enterprise turns smart devices into secure mobile POS
videos explaining a new promotion or a new application
VeriFone’s PAYware Mobile Enterprise (PWMe) is an award-
being rolled out to all mobile
winning solution that enables retailers to transform consumer tablets and smartphones into secure mobile POS devices for
POS tablets.
payment and more. PWMe includes a secure card encryption
The associate would then
sleeve, with EMV PIN pad and a 2D barcode imager that slots
start the workday and, while
onto a smart device, enabling it to perform a variety of
performing the usual
applications including card transactions, mobile POS and queue-
activities, keep an eye out for
busting. PWMe is also enabled with contactless/NFC technology
customers that may need
to create a two-way communication between the retailer’s mobile
assistance. The associate
POS and a consumer’s NFC-enabled mobile phone.
would approach a consumer interested in an item and
PAYware Mobile Enterprise allows retailers to create a checkout wherever, whenever. The technology takes mobility to the next
check inventory to see if the
level, creating an end-to-end solution to increase speed of
item is available in the desired
service, create new revenue opportunities, enhance a retailer’s
size and color by browsing the
Mobile POS devices not only accept payment, but they also can be used to instantly check inventory, consult an online catalog or sign up new loyalty customers.
brand and build customer loyalty.
online catalog. If the item was not present at the store, he could
Additionally, PAYware Mobile
have it shipped to the customer’s home from a central location
Enterprise can be made into a
or another store and use the EMV-enabled add-on to the tablet
powerful tool for consumer
to perform a secure chip and PIN transaction. At the end, the
engagement and retail management
associate would enroll the customer in the store’s loyalty
with the addition of VeriFone
program.
GlobalBay retail apps.
Later, the sales associate could be approached by a consumer asking for suggestions on an item. The associate would tap the
With PAYware Mobile Enterprise, retailers get everything needed for tablets and smartphones to securely process transactions and deliver tailored offers on the spot.
consumer’s NFC mobile phone to its NFC-enabled tablet and check if the consumer already participates in the store’s loyalty
The power is in the apps
program. That would allow him to access the profile of the
Retailers enabled with mobile POS devices have the opportunity
consumer online and get automatic recommendations of items.
to do more than create mobile checkouts. The same devices
Upon deciding what to buy, the consumer would make the
used to accept payment can enable a number of apps that help
purchase by just waiving the NFC phone at the tablet to make
associates engage consumers anywhere in the store and
payment, redeem coupons and earn loyalty points. New coupons
improve consumer experience. These devices will become a tool
would be automatically sent back to the consumer’s mobile
for complete management and interaction in the store with their
phone.
own associates and store management.
At the end of the day, the sales associate could check his
A day in the life of a the retail associate of the future
performance against other associates and write in the company
Imagine a day in the life of a retail associate equipped with one
blog about what he learned in store today. All associates and
of these devices. The associate can start the day by logging into
management would get a message with the blog entry in their
a tablet-enabled POS, getting an acknowledgement of “check in”
next check in.
and receiving from the tablet any messages from management.
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VeriFone GlobalBay: The future arrives today VeriFone GlobalBay’s mobile retail solutions can significantly enhance retailer-to-consumer interaction. The patented technology platform generates tangible ROI by driving store traffic, increasing units per transaction (UPTs) and improving the consumer experience.
Clienteling: Know your customer, make the sale Clienteling will become a core part of many high-street retailers’ future strategy. Just as internet shoppers who have purchased before are recognised as soon as they click onto a website, it won’t be long before retailers will be able ‘know’ their customer as soon as they enter the store. Through clienteling, VeriFone GlobalBay mobile apps and integration services can even provide a single, centralised solution for retailers to manage all aspects of customer relations; one that lets sales staff identify individual customers and access their preferences and buying habits in real time.
Retailing: Scale interactions The VeriFone GlobalBay retailing application enables retailers to scale interactions with customers without the need to add additional store associates. It also provides an additional channel to deliver information to the customer. The retailing app can offer basic features such as program and card enrollment, product and price check, promotions and coupons to more sophisticated features such as videos and adverts.
mPOS: Sell anything anywhere Recover abandoned sales, capitalize on pop-up store opportunities and provide a better customer experience by moving away from fixed point-of-sale registers. The VeriFone GlobalBay mPOS app extends your current point-of-sale system to mobile devices. Boost sales and increase revenue by accelerating checkout and eliminating purchase abandonment while improving the overall buying experience with personalized customer service.
Inventory Management: Instant visibility Gain instant visibility to in-store inventory while saving hours of store associate time currently spent on inefficient inventory management processes. The VeriFone GlobalBay Inventory Management app extends existing inventory system functionality to mobile devices. This powerful capability will enable retailers to better manage routine inventory management tasks from the shop floor.
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Six steps to reimagining retail
4. Be socially active Social media can help brick-and-mortar retailers reach out to customers and increase brand awareness, but also gauge interest and needs to help turn around shops at risk. Facebook can serve as a focus group, allowing retailers to learn about customers’ preferences. Group buying websites bring awareness to a company’s brand while taking advantage of promotional activity. Social media also empowers retailers. By listening to customer feedback, both good and bad, retailers can find the right target group for products/services and learn which innovations will appeal most.
1. Be prepared to exploit NFC platforms With smartphone manufacturers now committed to NFC, it’s no longer a ‘chicken and egg’ situation. Consumer enablement will force retailers to accept NFC in order to remain relevant to their lifestyles. By being NFC enabled at the outset, retailers can gain considerable competitive edge with customers and also benefit from close working partnerships with key industry players before the market becomes too saturated. 2. Remember POS is not just about payments NFC delivers two-way, real-time communication between the merchant and the consumer. With NFC, merchants and retailers of all kinds can turn their point of sale into a much more valuable point of interaction that provides customers with intelligent and ultra-secure checkout capabilities.
5. Choose a partner with proven ability For mobile commerce to reach its potential, many payment devices currently in the field will need to be upgraded. It isn‘t simply an issue of adding an NFC reader, it requires deep software richness at the POS to interact with customers and manage a services-based model encompassing new applications and deployments. Retailers should be wary of new supplier and integrator entrants who may be attracted to the size and volume of the market, but who may lack the necessary knowledge, financial stability or longevity to see their projects through successfully. By opening up discussions with established vendors, such as VeriFone, retailers will be better placed to understand the impact on existing operations once NFC goes live.
3. Get creative at the POS Mobile will open up new opportunities for loyalty, promotion and brand building. This requires a new level of creative input and the involvement of marketing and communications functions. Make sure all relevant departments across the organization are engaged, informed and up to speed with mobile commerce and what it means to them and their activities. Retailers may also need to consider additional investment or re-allocating marketing budgets into new promotional activities that can leverage mobile commerce as a communication and fulfillment platform to drive new competitive advantage and revenue streams. For example:
6. Leverage existing spend Many retailers are currently replacing their POS estates in order to comply with the latest PCI standards. Stores with regular, lowvalue, high-volume cash transactions may also be looking to upgrade devices to take contactless payments. Any investment in POS infrastructure today should include a roadmap for NFC enablement. Without doing so, retailers risk being left behind. They may also eventually be forced, by stakeholders and customers, to commit to future upgrades which would incur a higher cost than a planned, phased roll-out that takes into account existing POS evolution roadmaps.
• Programs that allow consumers to use virtual e-gift cards, participate in loyalty schemes and earn rewards at the POS • Materials and apps designed to exploit two-way communication between the handset and POS device or NFC stickers in store to transmit e-vouchers, loyalty rewards, payment and promotional messages
From in store to online and now mobile, the challenge for retailers is how to unify their customer interface. As consumers spend increasing amounts of time online, retailers are now focusing on mobile platforms as the “glue” that ties physical products and stores to the digital world. Mobile promises a shift to a customer relationship model that lets retailers know exactly who their customers are, and allows customers to opt in and define how
• Provision of links for social media fan favorites and group discount offers • Gathering customer data efficiently through various payment devices for improved consumer analytics • Enabling alternative payments methods to create mobile POS in and out of the store
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they interact with the retailer.
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C O NCLUSI O N Thanks to new developments in technology, innovation will play an increasingly powerful role in retail strategy. For the consumer, these new platforms will bring the allure of greater convenience and better service – everything from electronic wallets on a mobile phone to the opportunity to easily cash in rewards and discounts electronically. For retailers, where image, promotions, seasonal pull and loyalty are important, new mobile and POS devices and applications will drive footfall with smart apps and engaging new services. VeriFone is already helping forward-thinking retailers prepare for these opportunities by ensuring that all its latest payment solutions are NFC/ contactless enabled with full colour and multimedia screens, as well as ample processing power to support these new sales initiatives and apps. VeriFone also believes it is crucial that retailers begin aligning retail NFC within their IT strategy now in order to take advantage of the full potential of mobile commerce and to make the mobile wallet a viable reality for customers. Technology such as augmented reality, where you can walk by a shop window and see yourself in an outfit from the store, is a great example of how payments and retail technology can
Successful retailers will leverage all aspects of consumer and POS mobiity to create a new shopping experience.
progress. Imagination and creativity are key to seizing these opportunities to create a new and more personal in-store experience. Retailers’ success will come down to brand differentiation and connection with their customers through all the channels. The ongoing challenge will be to find partners who can tell the story with authenticity and consistency. VeriFone understands that payments will become a more integral part of the sales process and is already providing the hardware, processing power, apps, connectivity and digital functionality to help retailers compete effectively for the hearts and minds of shoppers. Through its holistic approach to mobile, NFC and integrated payments, VeriFone will continue to evolve the POS to deliver intelligent ideas and solutions that make retail stores more compelling and interactive for everyone.
www.verifone.com
© 2012 VeriFone, Inc. All rights reserved. VeriFone, PAYware Mobile Enterprise, GlobalBay and the VeriFone logo are either trademarks or registered trademarks of VeriFone in the United States and/or other countries. All other trademarks or brand names are the properties of their respective holders. All features and specifications are subject to change without notice. Reproduction or posting of this document without prior VeriFone approval is prohibited. 5/12 46301 Rev A FS
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