What's The Proper Path For Better Payments?
Progressive Grocer|December 2020
How the pandemic and loyalty can help food retailers get a firmer handle on transactions.
Thad Rueter

Key Takeaways

Fueled by the pandemic and the associated spike in grocery e-commerce, food retailers are embracing new forms of payment.

One way to eliminate food retail friction is to integrate a retailer’s loyalty program and other discounts with, for example, the digital wallet on a shopper’s mobile phone.

Major food retailers like Walgreens are beefing up their loyalty programs as payment methods grow more numerous and digital.

Just as the holiday season was getting in gear, CVS Pharmacy offered a glimpse at the future of payments in the food retail world and beyond.

The drug store chain launched a service enabling customers to check out touch-free using PayPal and Venmo QR codes at 8,200 stores. These codes allow customers to securely pay for their items without needing to touch a keypad or sign a receipt, while also being able to access multiple payment methods available in PayPal and Venmo wallets.

According to CVS, this made it the first national retailer to integrate PayPal and Venmo QR code technology in its point-of-sale experience at all stand-alone locations across the country. The touch-free experience will be available to existing PayPal and Venmo customers, while new customers can sign up and link their preferred payment method, usually within minutes.

“Putting our customers’ safety at the forefront of our innovations, we’ve focused resources on finding new ways to make customers’ lives easier and more convenient,” said Jon Roberts, EVP and COO at Woonsocket, R.I.-based CVS Health, at the time of the launch. “Introducing more digital options, including touch-free payments at the register, is in step with changing consumer preferences.”

Fueled by the pandemic and the associated spike in grocery e-commerce, food retailers are embracing new forms of payment. While the main thread linking these innovations is contactless technology, that doesn’t mean that one size will fit all — or that the acceptance of PayPal, Venmo or the myriad other cutting-edge payment forms will guarantee success as transactions become an ever more important part of the overall consumer experience.

Payments Race

“Amazon Go has proven that people want to shop a cashier-less shopping experience,” says Joe Lampertius, president of ChaseDesign, a Skaneateles, N.Y.-based company that helps retailers build better commerce experiences, including through payments.

Now, Lampertius adds, other food retailers — along with banks, credit card companies and other players in the payment space — will have to figure out how to keep up, or come up with other transaction innovations to satisfy consumers, including relatively young digital natives. “It’s going to be an interesting race to who will help expand that technology,” he notes.

Make no mistake, though: Cash isn’t disappearing, especially in the food retail space, even as merchants work to eliminate friction. While the number of U.S. consumers without traditional bank accounts continues to decline — it reached a record low of 5.4% in 2019, according to the FDIC — many consumers still like cash, especially when it comes to some of the smaller purchases made inside grocery stores. Food retailers have no reason to make life more difficult for such shoppers.

Within the larger food and beverage world, those operations — such as quick-service restaurants — that tried to implement no-cash policies have often failed. Consumer backlash has been severe, even in large urban cores, and as John Helmle, EVP and president, financial technology for Winston-Salem, N.C.-based Inmar Intelligence, points out, at least 21 local governments and states now require businesses to accept cash.

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