As new systems and digital capability continue to evolve the way retailers run their businesses, Essential Retail is gauging the views of the sector's main figureheads, via a series of exclusive interviews. This week, it's the turn of Barclaycard's Director of Innovation and Strategic Initiatives, James McDonald.
On 9-10 March 2016 the retail industry will descend on London Olympia for the latest instalment of RBTE – the largest end-to-end retail solutions event in Europe.
In addition to the individual conference theatres dedicated to wider retail technology trends and eCommerce, there will once again be a payments stream that gives visiting retailers, hospitality professionals and other attendees from consumer-facing industries a comprehensive insight into all the latest innovation, legislation and transformation taking place at the point of sale.
The Payments Theatre, which over the course of the two days includes sessions from the likes of Visa, MasterCard, PayPal, the UK Cards Association, Vendorcom and Worldpay, is this year officially running in partnership with Barclaycard. The company's Director of Innovation and Strategic Initiatives, James McDonald, says that the payments world is currently navigating its way through a complex period of change but is excited about the direction it is headed.
"Consumers have the digital capability now and the retailers have clearly moved forward with their eCommerce implementation, so we're seeing an explosion of new solutions, new technology and new demands that are all fundamentally defined by retailers wanting to interact with consumers on whatever channel they wish to use," he told Essential Retail.
McDonald, who has worked at Barclaycard for 43 years and who describes himself as a veteran of the industry, has led multiple payment programmes within the business. He played a central role in Barclaycard’s support of Transport for London's (TfL) adoption of touch-and-go payments, and views the payments sector as being much more than a transaction facilitator nowadays.
"With the escalation of mobile and a move by retailers to omni- and multichannel to engage digitally with consumers, that moment of capture and point of interaction is no longer simply sitting on the end of the transaction at the counter," he argued.
"We need to help retailers navigate the customer experience. As retailers compete to develop this we have a key role in helping them embed the appropriate payment experience in that digital journey. That's different to just paying for goods."
In just the last couple of weeks there have been plenty of announcements relating to innovation and change in this space, ranging from Samsung Pay detailing plans for launching its mobile payment offering in the UK later this year, to Wincor Nixdorf and Mahindra Comviva's tie-up that will allow consumers to use a mobile wallet to withdraw cash and top up their mobile wallets at an ATM, via NFC technology.
It truly is an evolving landscape at present, and one that McDonald believes will ultimately result in positive choice for shoppers.
But does the advent of a digital payments era mean the traditional card companies should feel threatened? At the National Retail Federation's Big Show in New York in January, the American Express chairman and CEO, Kenneth Chenault, said his company's own digital payments drive was effectively cannibalising the card business the organisation has traditionally been known for.
McDonald views this with a different perspective. Highlighting the attitude card companies need to take during times of change, he said: "I probably wouldn't use the world ‘cannibalise’.
"At the end of the day our retailers are trying to engage with their consumers, and the way they are doing this is changing. Our job is to help them build that experience by providing the skills, expertise, products and services they need to grow their businesses. We have to respond and enable that and it means we have to do that differently to before.
"Whether you call that cannibalisation of what we do, or building and extending on what we do, it is definitely different – that's for sure."
He added: "I think we have to expand ourselves to think more about end-to-end consumer experience and the end-to-end goal of retailers."
Some of those specific retailer targets will be discussed in detail as part of the payments stream at the RBTE conference, with Tesco, Auchan, Spar, Clarks, River Island, Decathlon, Hillarys, Prezzo, Debenhams, Shell, TfL, Monsoon-Accessorize and Subway all represented on the speaker and panel line-up.
Visitors to the expo will have an opportunity to hear real-life case studies relating to how these retailers are deploying new payment processes, as well as their predictions for the immediate future of transactional technology.
Data from Barclaycard, which processes almost half of all UK credit and debit card transactions, shows that although cash and Chip & PIN cards represent the majority of spending in the UK, the use of newer payment technologies is significantly rising. Spending using contactless reportedly jumped by 164% last year and a third of merchants now take this form of payment.
Research by Barclaycard has also shown that one in four merchants now also accept mobile payments, such as Barclaycard’s Contactless Mobile, the UK’s first mobile contactless payment option for Android devices. A number of retailers also take in-app payments, with some consumers preferring to use their mobile wallets to make convenience purchases.
Among the trends identified by McDonald as key contributors to driving change in today's payment market include retailers' increasing desire to serve customers on multiple channels in a joined-up way and their growing focus on trading internationally. He also notes that there are now more payment types available, while businesses are increasingly connecting their point of sale to a gateway and placing their payment functionality in the cloud. The environment for an open architecture also means businesses can pick out the best of breed from multiple solution providers when developing their payment options.
So will there be one winner in terms of how we pay, or is this evolution effectively all about increasing consumer choice?
"I think it's a retailer's opportunity to extend their reach and engage with their consumers in a different way," said McDonald.
"The mobile, in-app payments and mCommerce piece is very interesting to retailers, but I think all these things will coexist. People still use cash, but less cash. I think people will use cards, but we'll have demographics that just want to use mobile – it's all about the consumer and they will choose what's best for them."
And as the payments piece continues to become more integral to the overall customer experience, McDonald thinks all players in the industry – be it retailers, payment technology businesses or traditional card companies – must work in collaboration.
"The thing we in the payments sector cannot ever lose sight of is what the consumer wants to do and what the retailer is trying to achieve, and also never lose sight that ultimately the things that tend to succeed have to be tied into human change," he remarked.
"They have to make people's lives easier and they have to enable them to do something they couldn't do before. That's the way I look at it. Things that become ubiquitous are easy to use, address real issues and enable exciting new things to happen."
Barclaycard is the official partner of the Payments Theatre at RBTE 2016, which takes place 9-10 March at London's Olympia. Visitors to this area will have an opportunity to hear from leading players in the retail payments space and discuss the latest industry innovation.
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