How can retailers adapt to the wearable payments boom?
Wearable tech is becoming commonplace. Consumers are synching phones to watches, watches to bank accounts and moving further away from traditional cash and card-based payments.
Payments expert MBNA, a subsidiary of the Bank of America, has produced research into what retailers should be doing to prepare for a wearable payments explosion. 72 percent of consumers believe wearables are the future of in-store shopping, according to a survey from Vista Retail Support .
MBNA wanted to get the low down on how retailers can adapt to this huge change on the horizon. They spoke to Kirstin Smith, Head of Fashion and Retail at Valtech - a digital agency that engineers consumer experiences for businesses, and James Pepper, Technical Services Director at Vista Retail Support - an IT and support organisation for retail businesses. They came up with these seven tips:
1. Track your average basket size
James Pepper says retailers with small average basket sizes should already be providing wearable payments: “If they haven’t got a way of accepting contactless payments and their average basket size is under £30, then they’re very late to that party.”
However, small retailers can take advantage of ‘out of the box’ solutions.
“If you go to your payment processor or acquirer they can lease you a solution. It’s quite a lot simpler than it is for a large retailer who has to implement that infrastructure and trial it.”
2. Consider software that surpasses the contactless transaction cap
70 percent of consumers believe the £30 transaction cap is too low. Apple Pay uses a new type of payment verification on the latest iPhones and Apple watches that allows the cap to be lifted.
A retailer providing payment terminals that are compatible with this technology could put themselves ahead of the competition.
James says: “The consumer desire for higher transaction limits with contactless payments may be something that, crucially, certain wearables can answer. In fact, contactless cards could be completely superseded by wearable technology as a payment method.”
3. Educate customers about wearables
Training staff to educate customers about contactless technology, including wearable payments, is something all retailers serious about incorporating the technology should do. James:
“In the US, when retailer Wholefoods educated their customers on how they were accepting Apple Pay, their mobile payments increased by 400 percent, which, again, can extend to wearables.”
4. It’s about more than just payments
Customers expect a lot from retailers today, from offering a variety of payment methods to providing in-store visual experiences. So it’s also worth identifying how wearables could feed in to the wider retail experience.
Kirstin Smith: “Retailers who find success will have worked hard to understand their end-to-end customer experience and how customers are really behaving. They will then have figured out which parts of that journey could be enhanced by wearables.”
5. Test drive new ideas
Once businesses have nailed their customer experience and figured out which wearables could work for them, Kirstin advises that businesses should start creating low-cost prototypes:
“The way to do this is through a hypothesis-driven, test and learn approach. Crucially, it’s about trying out new ideas with real customers. Smaller retailers have the advantage over big businesses since they can be more agile in their approach. If I were a smaller business, I’d head straight to the buzzing fintech market to see what alternatives exist.”
6. Keep track of trends in retail experience
Look out for key announcements in wearable technology and retail innovation. As James points out, wearable innovation is already changing retail for some businesses:
“There are systems that can identify a customer, pull up their purchase data and push out marketing information to their mobile, which can always be extended to the wrist.”
Devices may also connect to in-store beacons so, as a consumer, you could wander in close proximity to the beacon and gain more information about a product. Or that information could be pushed to you using in-store Wi-Fi.
7. Watch out for the tipping point
Retailers need to be prepared for the point at which consumer and retailer behaviour changes to avoid being left behind.
Kirstin Smith: “I think many retailers will begin with baby steps but as soon as one retailer cracks this, others are sure to follow at speed!”
A full version of these tips can be viewed here: www.mbna.co.uk/blog/wearable-payments-retailers/
Read the July EURO 2016 issue of Business Review Europe magazine.