Customers don't care about payments. Paying for goods, with cash, card, or even Apple Pay is not the exciting part of shopping – walking away with the product is what gives shoppers the retail rush.
And this is why Adam Bialy, head of payments at Sainsbury's, believes the act of paying for items will begin to blend into the background.
"I think payments are bound to become invisible and take a backseat to facilitate a seamless frictionless experience," he tells Essential Retail. "As a customer payments aren’t your priority - you just want to get the money out of your account and into another so you can buy your chicken."
Uberisation of payments
He points to Amazon and Uber who are already fading payments into the background of the consumer journey: Uber's mobile app takes care of the payment in app, so customers don't even have to think about money, while Amazon's new Go store allows customers to walk out with their groceries, without physically paying.
"Ideally customers want to walk into Sainsbury's and have the same Sainsbury's experience – a great choice of quality products – grab a piece of chicken and not have to queue at the till. But there's a lot of operational process to support that type of journey. As a payments geek, that's my nirvana."
But even the sexiest of payments methods are failing to dramatically change consumer shopping behaviour. Bialy points to Apple and Android Pay, the adoption of which by Sainsbury's customers has been relatively low. He admits this might have something to do with the typical Sainsbury's shopper, but he says it might have more to do with the fact there isn't a huge benefit for customers to adopt the technology.
"The value proposition is limited," he says. "Effectively it's just convenience, there’s no incentive or anything tangible for customers. And the speed hasn't changed much, contactless cards are faster because with a mobile wallet you still have to unlock the screen and authorise the payment with a thumbprint or pin."
Bialy says retailers are in the position to extend this value proposition with discounts or extra loyalty points. "Retailers have the advantage, because we can offer customers value using incentives and loyalty schemes.”
Meanwhile, Bialy admits Sainsbury's has been slow to roll out contactless payments. The retailer completed the upgrade of tills at all 1,375 stores to accept the technology in mid-February 2017.
"We knew our customers wanted contactless, but our till technology wasn't ready for it," he says. "We’ve made significant changes to our till technology which has allowed us to roll out contactless to all supermarkets and convenience stores – better late than never.”
The grocer began rolling out the technology to its Local convenience stores in November, and since then Bialy has said the uptake has been "massive". Unsurprisingly, since the latest figures from the UK Cards Association reported 100 million contactless debit and credit cards in circulation, while Barclaycard has said use of the technology increased 166% in 2016.
Bialy points out the take up of contactless is down to the ease of use – tap with a single card and you've paid. But the retail industry is still pushing customers to use their mobiles. He says customers are facing an overload of mobile apps – with four or more different grocery apps, another for your daily caffeine intake and even more for your mobile banking. And this fragmentation of the market goes deeper than just consumer-facing mobile apps, it's the multiple acquirers and issuers which makes the payments industry a complicated beast.
Bialy says retailers need to group together in order to tackle the industry. "There's a lack of cohesion and togetherness, and no collective understanding among retailers. We could use more alignment," he says, suggesting a group of six UK retailers grouping together to agree on a set of principles could further the interests of retailers much more effectively than the siloed individual commercial relationships driven by an out-of-date convoluted industry.
"The value of acquirers, Visa, MasterCard has diminished significantly and there are many changes going on with banks, who are having to open up their APIs to all third partiers," he says. "What would be better would be to get retailers together to drive the innovation agenda."