Mobile is making itself felt in retail in obvious and not-so-obvious ways. But Visa and Kroger are dealing with mobile in very different ways, with Visa — perhaps a decade too late, but late is better than never — conceding that the authentication of mobile payments makes signing for a purchase no longer necessary. Meanwhile, Kroger is pushing mobile checkout but still wants shoppers to wait in line to pay.
Visa ups its mobile game—says payment signatures no longer required
Let's start with Visa. In a very significant — and long overdue — move, Visa last week (Jan. 12) joined fellow card brands MasterCard, American Express and Discover in signaling an end to the payment signature, as of April in Visa's case. Technically, the brands merely said that signatures are no longer required, but given that retailers have begged for the end of signature for years, as a practical matter, it will be gone in the U.S. before the summer arrives.
A lot of factors are behind this decision (EMV, in-store video cameras tracking purchases, the lack of meaningful signature analysis at the POS, etc.), but what pushed signature over the cliff was mobile.
We noted the lunacy back in May 2016 when EMV started kicking in. Until then, shoppers could make mobile payments authenticated with a finger scan (and today, slowly, facial recognition) and be on their way. But as we noted back then, the EMV change forced shoppers to be called back to the POS to sign for their purchase.
Remember way back when you took your SATs? They had those comparisons we had to complete: A is to B, as C is to ___. Well, the authentication of biometrics is to the authentication of signature as a nuclear warhead is to a spitball. Actually, that's not fair. A spitball can indeed cause momentary pain, whereas signature in 2018 doesn't deliver any authentication at all. How many handwriting experts are working at Walmart or Macy's? Why even bother?
The real issue behind that "come on back here and sign" situation involved the lack of visibility into the payment method. But once that was cleaned up, it became clear that signature was pointless. Granted, signature has been pointless for more than a decade, but mobile payments' far superior authentication made it ludicrous.
It was late last year that MasterCard, American Express and Discover all announced the end of the signature requirement, with Visa (by far the largest of the payment brands) waiting until January to do the same. But at least they all ultimately concluded that fighting mobile payments no longer made sense.
Kroger still has lessons to learn
As for Kroger, that lesson has yet to be learned. Back in October, Kroger — a $115 billion retailer with almost 2,800 stores — noted a variety of impressive (impressively vague) technology plans: "Kroger will continue building its Internet of Things sensor network, video analytics and machine learning networks and complement those innovations with robotics and artificial intelligence to transform the customer experience." Kroger spokespeople have declined to get more specific.
But one specific effort that the company has detailed somewhat is its plans to "redesign front-end to maximize stores for self-checkout, include expanding currently 20-store Scan, Bag, Go pilot to 400 stores in 2018."
Business Insider probed a bit deeper into that pilot. Here’s the key quote: "Shoppers scan the barcodes of items they wish to purchase using a handheld scanner, provided by Kroger, or the chain's 'Scan, Bag, Go' app on any smartphone. The technology will keep a running tab of shoppers' total order and offer applicable coupons. It will also eventually alert customers when they walk past an item on their shopping list. When customers are finished shopping, they can visit a self-checkout register to pay for their order. Soon, shoppers will be able to skip that step and provide payment through the app instead."
Let's drill into that smartphone app, which is the appropriate method. The vast majority of Kroger shoppers already walk into the stores with smartphones, so why make them use another device? I love the idea to "alert customers when they walk past an item on their shopping list," but it's not clear how that will be done. Will it use item-level RFID to truly note what every SKU is, or will it merely use a planogram from the store showing where items are supposed to be rather than where they truly are? Will it flag when the specific product (raspberry-flavored corn flakes in the 9-ounce containers) is out of stock, or will it make shoppers make a pointless search for something that isn't there?
Those capabilities aside, it's a good first step. My question is why Kroger would go this far and yet not initially include mobile payment. Put another way, why have the smartphone scan every item, total it and then force the shopper to stand in line to pay — when excellent mobile payment options have been around for years?
The most frustrating part is that Kroger execs will likely decide whether to move to mobile payment based on the participation rate. What is that logic? If it performs poorly — and who is to say what constitutes "poorly"? — then it will be dismissed as a failure. Why not start with mobile payments and truly embrace current technology and shopping convenience?
I asked Kroger what is delaying mobile payments, but it didn't reply.
Lisa Davis, a vice president at Salt Lake City-based analytics firm InMoment, shared an interesting theory about why Kroger is doing this in a way that makes its effort "more clunky, more frustrating." She speculated that it's not an IT hurdle as much as an LP (loss prevention) hurdle. Kroger's LP mechanisms, including positioned security cameras and associates watching for theft at the self-checkout, would be ineffective against an in-aisle checkout system. In short, Kroger's LP infrastructure is not yet able to support mobile checkout.
"When they roll out technology, they forget about looking at it from the customer's perspective. They are missing a really critical touchpoint in this journey," Davis said. "Their processes need to be completely reimagined."
Davis' point is a good one. When a company such as Kroger rolls out a better way to shop, it needs to change all of its processes to accommodate that.
The choice for retailers today is to reluctantly embrace mobile, as Visa is doing, or to try to force mobile to accommodate existing retail infrastructure, which oddly seems to be Kroger's approach.