According to a Pew Research Study conducted in December 2014, some 64% of adults own a smartphone, including 85% of those ages 18-29 and 79% of those 30-49.
In 2014, consumers used those phones to spend an estimated $4 billion at the point of sale (POS). Known as “mobile proximity payments,” purchases using a phone are expected to account for $54 billion in sales by 2019, according to Javelin Strategy & Research, a technology and consumer research organization based in Pleasanton, Calif.
Use of a mobile phone at a store or checkout is likely to be used by 45% of mobile consumers. “To demonstrate how quickly the consumer mindset is changing, four years ago just 20% of consumers were likely to use this capability,” said Daniel Van Dyke, an analyst at Javelin. “This is a gain of over 42 million consumers in a very short time.”
C-stores from Cumberland Farms to Maverik have been rolling out various forms of mobile payment using an array of technologies.
Sinclair Oil has rolled out mobile payments to 63 stores thus far. Its app uses geo-fencing to pinpoint consumer location and either direct them to a pump or recognize which pump they are at. In the app, customers touch the pump number that corresponds to their dispenser and use a self-selected PIN at the dispenser to dual authenticate themselves in order to activate the dispenser, explained Russell Gibson, manager marketing technical services, Sinclair Oil Corp.
The biggest challenge for Sinclair so far with mobile payment has been waiting for the POS manufacturers to complete the update of their systems with the proper Conexus API (application program interface) for Sinclair’s provider, P97 Networks, according to Gibson.
EMV (Europay, MasterCard, and Visa) remains another part of the electronic payments puzzle.
“EMV will be rolled out by POS manufacturers,” Gibson said. “To date, I am not aware of any suppliers that have released to production their EMV software. In order to run EMV, a merchant must have the latest hardware.”
“Attempting to fix or add EMV to older models just is not effective,” Gibson said. “Older systems typically have less robust processors and EMV will operate rather slowly on them. Upgrading to new hardware just for EMV is a difficult pill for merchants to swallow because there is no payout for the equipment.”
Sinclair has worked with its POS providers and P97 networks to add the mobile commerce solution to the new hardware/software. “If mobile commerce turns out to be faster than EMV and if the couponing brings more customers inside the store from the forecourt, then this helps put some payout back into this expenditure,” Gibson added.
Today, customers are looking for security and ease of use when it comes to payments, Gibson noted.
A national survey of 2,028 registered voters conducted by polling group Morning Consult found 75% of respondents agree stores should move as quickly to adopt new forms of electronic payments that help protect consumer information.
A whopping 83% agree that while retailers may prefer a particular form of electronic payments, they should look at adding more options for their customers. Molly Wilkinson, executive director of the Electronic Payments Coalition noted choices and security are top of mind for customers when pondering electronic payments.
Stay tuned to Convenience Store Decisions‘ March issue, where we delve into 38 in-store categories to identify emerging trends and garner retailer analysis to forecast what operators can expect for 2016 and beyond.