While cash is here to stay, how money is saved, withdrawn and converted is changing quickly.
By Brad Perkins, Contributing Editor
Offering banking services at a c-store may seem daunting or even impossible, learning what banks offer and whether it’s possible to offer versions of some of those services in c-stores is one more way retailers can maximize convenience for customers in an age of ongoing disruption.
“Part of it is you need to start learning what financial services entails,” said Daniel Burrus, futurist and CEO of Burrus Research Associates. “Are we talking about checking accounts, savings accounts; getting a new credit card; getting a small business loan?”
You may not see bank branches opening in convenience stores, but there are many ways that convenience stores can—and already do—offer financial services. From money orders to gift cards; check cashing to bill pay, many stores are embracing financial and payment services because of the convenience.
“The benefit of purchasing money orders and prepaid cards from a convenience store is that it’s simply more convenient and affordable,” said Brent Chadwick, vice president of finance and chief financial officer at Beaverton, Ore.-based Plaid Pantry, which offers money orders in its 108 locations in the Pacific Northwest. “Our pricing is the lowest in our market, and you would have to drive by a lot of Plaid Pantries to get to a bank to purchase your money order.”
And if getting started seems hard, there is likely already one financial service in the store—the ATM. They aren’t going away any time soon, some have evolved to take mobile applications, and Burrus suggests with the right demographics, a convenience store ATM could offer Bitcoin or other cryptocurrency.
But cash equals security concerns, and with the availability of mobile payment technology pushing some to ditch the cash, adding another payment component could soon become a necessity.
In 2018, Casey’s General Store introduced Amazon Cash, which allows customers to pay for their purchases using barcodes on their mobile devices that connect to their Amazon accounts.
The benefit is that the company can draw in customers who either don’t have bank accounts or are concerned about credit card safety and would rather use mobile pay.
“Amazon Cash was offered as another payment platform to help capture consumers,” said Mike Richardson, vice president of marketing for Casey’s. ”As with most new rollouts of this type of service it has started softly but continues to grow.”
That growth is expected to push convenience store owners to add mobile payments quickly. A 2017 JP Morgan Chase study showed that only 36% of merchants accepted digital wallet payments. But that should change.
“Mobile payments are continuing to grow very rapidly because they are so much more secure versus making a payment from a credit card, even when the credit card has a chip,” Burrus said. “I think the mobile payment future is extremely bright.”
As mobile payments grow, tried-and-true items like money orders and bill payments will continue to succeed because they are profitable and drive increases in foot traffic.
Plaid Pantry has been offering money orders for 20 years and began doing so to increase the number of customers coming into its stores. And as the rules of commerce dictate, the more foot traffic, the more people purchasing additional items.
“I believe people come to the store to get the money order and will occasionally grab a drink or a snack while in the store,” Chadwick said. “The hope is that when they need a quick stop for something else in the future they will have a good experience in our store and come back.”
Kent Oil, which has been offering check cashing and bill pay at 14 of its stores for nearly 20 years, would agree.
“We have 14 Mr. Payroll locations—payroll checks cashed inside our stores—it’s a solid business model for us,” said Terry Adkisson, chief operating officer at Kent Oil. “We also accept payments for various utility companies and fees are attached to each bill. Our customers really enjoy having that service available.”
These programs bring in additional customers looking to spend additional money, even if they are in to use services. So how do convenience stores expand beyond the known entities? Burrus envisions the ability to scale up to compete with the likes of Amazon or Walmart by embracing technology.
“Any kind of service that can be provided through a kiosk would be very viable,” he said. “A kiosk is a visual gateway. Of course, that involves some training, but I think convenience stores are also looking for a way to keep manpower down and not have to do a lot of training. The more it can be self-explained through the device, the better and that’s why a kiosk is going to be useful.”
Another key growth area in payment technology is the smart vending machines which, like kiosks, can either direct customers to the product in the store, sell it directly or even deliver it.
“Smart vending has huge potential in convenience stores and part of that could be covered with financial services,” Burrus said. “A smart vending machine uses a combination of artificial intelligence and the camera to be able to learn about the person standing in front of the vending machine very quickly. Typically, in a vending machine, [customers] only have certain things that they can buy; that are right there that you get at the touch of a button.”
But smart vending machines can recognize people, identify loyalty cards and even offer items that it doesn’t have in stock, prompting convenience store customers to bypass Amazon to use the machine in the store.
With so many options, it can be hard to decide what to add. But whether it’s increased adoption of payment services like mobile pay, money orders or check cashing; partnering with a bank branch to offer banking; or something more, two things are clear: a store needs to know its demographics to offer what will fit, and popular added services will bring in customers.
“For us, many of our locations are in rural areas that have limited stores that can take these types of payments,” Richardson said. “Consumers are looking for access to these types of services and we will at least attempt to provide those that make sense for Casey’s. If the consumers are looking to use these services, they are going to shop where they are accepted or sold.”