As checkout disappears, terminal makers enter new territory

As checkout-free stores dramatically reduce — or even eliminate — the need for point-of-sale devices, terminal makers are turning their focus to multichannel services that can keep younger, digital-savvy customers coming into stores.

Amazon Go and other checkout-free retail concepts have drawn a lot of attention and investment, but retailers can counter that by focusing on the experiences that surround the transaction, contends Jennifer Miles, executive vice president for North America at Ingenico.

“Anywhere that has a checkout button makes it easy" to make a payment, Miles said. "The button speeds up the checkout process. If I’m a loyal customer, I don’t want to go through that same process. I want a ‘personal shopper.’ ”

Miles joined Paris-based Ingenico in 2017 after having worked for its American rival, Verifone. Her tenure at Ingenico corresponds with new company leadership, a consolidating terminal industry and a hot market for technology designed to allow shoppers to enter and exit stores without using point of sale terminals. Ingenico also faces the same pressures it has for years from digital merchant acquiring companies like Square and Stripe.

Part of Miles’ work at Ingenico involves an innovation lab where Ingenico anticipates what the retail environment will look like several years out. Armed with that information, Ingenico looks for spots to boost foot traffic in stores and reimagine how low-touch checkout works without abandoning the actual checkout. It believes it has found an opportunity in millennials and Gen Z, which have shown a tendency to be loyalty to retailers that surround shopping and payments with new experiences.

“I don’t know how far the Amazon Go concept will go, the idea of no-touch, no service,” Miles said. “What we see is [younger] consumers want a blend of easy payments and shopping experiences.”

Millennials have a reputation for not being loyal to brands, but there are signs retailers can build lasting loyalty once winning a consumer. A Forbes study reports millennial brand loyalty increases 28% for brands that personalize shopping experiences and communication. There are also signals that younger consumers prefer Venmo-style social tools as part of shopping and paying, which also feeds a trend toward personalized experiences through sharing with a group of friends.

“When we build new tech we want to enable retailers to support an open experience, for a consumer to walk into a store and engage with staff or items and then pay online or through mobile,” Miles said.

Ingenico would not discuss specific clients, but Miles said example use cases include cosmetic experts that guide consumers from product recommendations to purchase; or a larger store that collaborates with smaller brands to give loyal customers a first look at new products; or the opportunity to test equipment as part of the purchase experience.

That complicates the checkout process as it needs to be more mobile inside a store, with staff checking out consumers; or enable a mix of in-store shopping, online payments, social tools and incentives through the same experience.

“The expectations are different. They expect loyalty points or rewards or coupons and offer and applied immediately,” said Bradford Giles, senior vice president of marketing and sales enablement at Ingenico. “The tech stack and complexities of different payment systems becomes more important.”

Ingenico's new payments technology will also allow independent software vendors to create off-the-shelf technology that has plug ins for multichannel payments, loyalty, market intelligence designed for mid-sized retailers, enabling them to offer the same range of experiences as larger chains, Miles said.

Ingenico’s new strategy comes about six months after the company underwent a leadership shakeup, as CEO Philippe Lazare exited the role in favor of Nicolas Huss, the former Visa Europe CEO. That came shortly after Ingenico received an unsolicited takeover bid from Natixis, a fellow Paris-based technology company.

Following the leadership change, Ingenico quickly accelerated its move into chatbots by working with IBM Watson to take advantage of double-digit growth in voice-based transactions.

Ingenico in June joined with Caixa Bank and Global Payments to invest about $8 million in an international innovation program called Zone2Boost to aid fintech startups. It has also bolstered its technology to serve online businesses payments and completed the acquisition of Paymark to add scale in the Asia Pacific region.

These moves are designed to add to Ingenico’s ability to mix channels, and to place more of an experience around the payment. "We want the payment to be part of the whole experience and not simply the end," Miles said.

Ingenico’s chief competitor, Verifone, has also made substantial changes. The company went private in a $3.4 billion deal with Francisco Partners in 2018, following several years of adding software to counter Square and Stripe’s encroachment into merchant acquiring. Verifone CEO Paul Galant stepped down shortly thereafter, and was replaced by Michael Pulli, an executive with experience in the wireless and broadband industries.

Verifone would not comment for this story. Verifone’s website it stresses the importance of embracing mobile services to span both the “physical and virtual worlds” to access all channels simultaneously—searching for stock and prices on a device while in the store, making payments through NFC or purchase items later from home.

“In today’s competitive market, retailers need to stay ahead of the game and create the best customer experience possible if they want to retain shoppers," said Luke Griffiths, the U.K. managing director for Klarna, which has done research linking customer experience to churn and brand loyalty.

Before e-commerce and omnichannel retailing, the merchant controlled everything from the path that the customer took through the store to the placement of merchandise to increase incremental sales, said Thad Peterson, a senior analyst with Aite.

“About the only thing that the customer controlled was whether or not they choose to do business with that merchant,” Peterson said. “Now the customer chooses when, how, where and why they interact with a merchant, and the best that a merchant can do is to ensure that they can offer a journey that the customer chooses to take, and that there’s as little friction as possible along that path.”

Embedded payments is the result of that effort, Peterson said.

“Payments have traditionally been a major point of friction in commerce, particularly in e-commerce, aside from one-click buy and other tools to reduce the challenges of paying for stuff,” Peterson said. “If the payment can become a ‘no-brainer,' just a click to enable, then there is one less barrier to the sale, and the merchant can focus on delivering a positive experience wherever and whenever the customer chooses to engage.”