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Table of Contents

Lead Story

Retail disruptors redefine commerce

Ann Train

News

Industry Update

News Briefs

Views

Cashless and cashier-less: a revolution in the making?

Patti Murphy
ProScribes Inc.

The Green Sheet, CCSalesPro start new podcast series

Education

Street SmartsSM:
Let's stir things up a bit

Steve Norell
US Merchant Services Inc.

Nourish sales and exfoliate fraud: Combatting beauty fraud

Don Bush
Kount Inc.

What does cryptocurrency mean for ISOs?

Jordan Olivas
RS Software Inc.

Your merchants are flying blind

Barry Davis
Womply

Company Profile

HPS Worldwide

New Products

Cloud-based EMV solution improves transaction speed, security

Cloud EMV
Clearent LLC

Prevent chargebacks with curated intelligence, automated alerts

Prevention Alerts
Chargeback Gurus Inc.

Inspiration

Silence is power

Departments

Letter from the editors

Readers Speak

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

July 09, 2018  •  Issue 18:07:01

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Cashless and cashier-less: a revolution in the making?

By Patti Murphy

Recent reports have me wondering what the future holds for the point of sale. Amid ongoing claims that cash is going the way of dinosaurs, news agency Reuters reported that Microsoft Inc. is developing systems that would eliminate the need for cashiers and checkout lines. Apparently, the software giant has been shopping the idea around to major retailers around the world, including Walmart Inc., Reuters reported.

Microsoft, which has a significant footprint in the retail systems market, including ecommerce, is angling to give Amazon a run for its money. In January 2018, Amazon opened the doors to its first Amazon Go shop, a highly automated store in Seattle. Amazon Go shoppers scan their smartphones at a turnstile to enter. Cameras and sensors throughout the store identify what customers remove from the shelves, and Amazon bills the credit cards they have on file as they leave the store.

While the Reuters report was thin on specifics, it stated one avenue Microsoft seems to be exploring is to attach cameras to shopping carts to track purchases, which would seem to be more economical than the hundreds of cameras and sensors required by Amazon's approach.

Michael Jaszczyk, CEO of GK Software USA Inc., a Raleigh, N.C., company specializing in integrated store solutions, described the move by Microsoft as a turning point. "Microsoft taking on Amazon with cashierless checkout demonstrates how close we are to a breakout of alternative 'checkout and scanning' processes and applications," he said in a statement. "The question now is not if, but when will we see wide range adoption in the market."

The notion of frictionless checkouts is nothing new. It's a perennial quest that accounts for much of the momentum behind mobile payments, for example. And several merchants have tested self-scanning, with mixed results. Giant Eagle Inc., a regional grocery chain headquartered in Pittsburgh, began a program about 13 years ago that allowed customers to scan and bag groceries as they shopped, stopping at the checkout merely to pay and print out receipts based on the scanner input. I'm a Giant Eagle customer. I found the shopping option useful but didn't miss it much when it was abruptly ended about a year later.

Jaszczyk believes the market is better positioned now. "As more vendors offer these types of self-scanning solutions and retailers pilot them in their stores, consumer demand will follow as well as increased store revenue," he said. "I believe that in three to five years traditional checkout lanes will become somewhat of a relic, and we will have a hard time remembering what it was even like to stand in line at the POS."

Call me old-fashioned, but I just don't see widespread appeal for cashier-less shopping, and I'm not convinced we'll see anything resembling widespread adoption, at least in the near term. Cashier-less shopping, in my mind, is a bit like cashless shopping: it sounds cool, but it's not practical as an end game. There always will be people who, for any number of reasons, like using cash, just like there will always be folks who prefer the human checkout experience.

There are also practical considerations. Most large retailers already offer self-checkout, but the underlying technologies can be quirky. I use these regularly but am often frustrated by problems that require employee assistance to remedy. On one recent shopping trip, I had to wait for assistance four times, each time seemingly longer than the previous, as I watched in frustration as a store worker hopped from one self-checkout lane to another remedying scanner and other problems.

Consumers' shopping preferences vary, and the variances can stem from a range of factors, including where they live, lifestyle preferences, socioeconomic standing and age. Millennials, for example, seem to like mobile-first, self-service shopping, while baby boomers are more apt to appreciate a personal approach.

As Tom Chittenden, Vice President and General Manager of Retail Solutions at NCR Corp. noted in a recent blog post, understanding and addressing these differences is crucial because baby boomers still have relevant buying power, and millennials aren't yet a dominant market force.

"People are living longer, so we're seeing Boomers still having a strong influence on the retail industry," he wrote. "And millennials are just coming into their full purchasing potential." While grab-and-go shopping has grabbed headlines, it's only one of several possible paths. Retailers who take a "single-vision approach" to in-store technology could well alienate parts of their customer bases, he added.

Amazon apparently understands this. Amazon Go is live in just one city, and according to news reports, the company isn't planning to move anytime soon to cashier-less shopping for Whole Foods, the grocery chain it purchased last year.

Cash usage and cash discounting

Despite the proliferation of card-based payment options (including mobile), cash remains a preferred method of payment in the United States and most countries. Merchants understand this, as evidenced by recent interest in cash discount programs, which reward customers with discounted prices when they pay with cash rather than using their credit cards. Sure, the main attraction is the lower cost of acceptance vis-à-vis credit cards, but merchants wouldn't be pursuing these programs if they didn't think consumers liked using cash.

In 2016, just over three in 10 consumer purchases (31 percent) were made with cash, according to a Federal Reserve report on consumer payment choices. Debit cards made up 27 percent of consumer purchases, and credit cards were used for 18 percent of purchases. The average value of consumer cash holdings that year was $57, the Fed reported.

More recently, the Bank for International Settlements reported that despite the proliferation of cards and other electronic payment options, demand for cash has increased since the financial crisis of 2008. The trend is particularly notable in advanced economies, like the U.S. economy. In a report aptly titled Payments are a-changin' but cash still rules, BIS attributed the trend to persistently low interest rates on deposit accounts which discourage consumers from banking their cash holdings.

I also believe cost is a consideration for merchants and consumers. Many consumers are debt averse, preferring not to rack up finance charges. Meanwhile, many merchants are looking to save on interchange. It's a powerful combination of attitudes that I see driving merchant and consumer interest in cash discounting programs.

Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. Follow her on Twitter at @GS_PayMaven or email her at patti@greensheet.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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