young woman carrying paper shopping bags in modern mall

Payments in the Stores of Tomorrow

How consumers will be shopping in 
the not-so-distant future

By Ed McKinley

The store of the future has been a long time coming. More than a decade ago, IBM produced a television commercial that follows a young man with muttonchop sideburns and an indolent expression as he hurries through the aisles of a supermarket, stuffing merchandise into his baggy coat. Everyone in the store, from the butcher to an elderly shopper, glares with disapproval at the suspicious-looking young man on what seem like an obvious shoplifting spree. But as the “suspect” exits the store, a security guard calls him back. “Excuse me, sir,” the guard says. “You forgot your receipt.” Immediately, a voice-over changes the tone of the ad from ominous to optimistic. “Checkout lines—who needs ’em?” asks the disembodied voice. “This is the future of e-business.”

Retailing may now have reached the brink of that long-anticipated future. Amazon, which overtook Walmart in 2015 to become the world’s largest retailer, is poised to invite the general public into its Amazon Go convenience store, which the company has been testing in Seattle. It’s a place where patrons’ cards or accounts are charged automatically when they pick up merchandise and put it into a cart or a bag; they can even stuff items into their tighter, modern-day coats if they choose. If they change their minds and put the product back in place, its price is subtracted. Think of it this way: While a shopper is filling a physical cart, the store’s amalgamation of high-tech gear totes up the purchases in a virtual shopping cart.

In a short, Amazon-produced video about the 1,800-square- foot Amazon Go store, hip-looking young adults navigate the store and make their purchase decisions. A narrator describes the technology that tracks their purchases as an amalgamation of “computer vision, deep learning algorithms, and sensor fusion—much like you’d find in self-driving cars.” The thinking behind the tech? “Four years ago, we started to wonder—what would shopping look like if you could walk into a store, grab what you want, and just go?”

Creating that experience requires what Amazon calls “Just Walk Out Technology,” the video’s narrator says. But the underlying machinery, electronics, and digital wizardry didn’t really require any technical breakthroughs, according to Dave Marcotte, senior vice president, retail insights, at Kantar Retail, a research, consulting, and technology company. “This is all fairly old technology,” he says of the Amazon Go platform. “Putting it together in a nice package is new. They put a ton of money into the architecture.”

Other retailers are already using similar technology to track inventory, notes Henry Helgeson, ETA CPP, CEO of Cayan, an acquirer and tech company that performs most payment processing functions. “They know where every item is in the store at all times, which is a huge time saving,” compared with manually counting the stock in the middle of the night, he says. High-tech inventory control can also reduce “shrinkage” from theft, observers agree.

But Amazon Go is apparently one of the first applications of the combined technology on the consumer-facing side of store operations, sources say. “When I first heard about Amazon Go, I was like, ‘That’s crazy—that’s the stuff you see in sci-fi movies, and now it’s coming to reality,’” recalls Peggy Bekavac Olson, principal of Strategic Marketing, a payments-oriented marketing firm. “But the crux of the matter is it’s improving the customer experience.”

Cashless Convenience

Besides enhancing the customer experience, the Amazon Go technology also boosts sales by removing the “friction” of handling cash, Marcotte says. That means consumers will buy more in a physical store with automatic payments than they would in a physical store without automatic payments or in an online store, he continues. It’s partly because consumers tend to lose track of how much they’re spending when payments are automatic, he explains. Studies show that consumers who handle the cash and coins needed to pay for their purchases have a good idea of how much they’ve spent over time, he contends.

Consumer budgeting aside, observers don’t expect stores like Amazon Go to begin appearing all over the country anytime soon. “Usually, I’m a big proponent of SMBs [small and medium-sized businesses] being able to adopt technology very quickly,” says Helgeson, “but this is big-retailer technology.” High costs could prevent single-store or small chain operators from adopting the system any time soon, he predicts.

Even if it’s expensive to mimic, the store’s convenience could prove tempting to retailers of all sizes, many of whom are focusing intently on improving the shopper experience. Helgeson cites the example of Drizly, a service that delivers liquor to a customer’s door, sometimes more quickly than a waiter brings a drink to the table in a bar, he says. “It’s part of the Uberization of everything,” he says.

It also appears that eliminating the checkout line in the Amazon Go store falls in line with a trend toward self-service, notes David Riddiford, president of Apriva LLC, a provider of gateways and wireless payments. His company is devoting considerable effort toward enabling companies to accept self-service payments, he says. Younger shoppers prefer to serve themselves without the help of store employees, he suggests. Meanwhile, in his view, businesses are accelerating their push to eliminate lower-level jobs as cities and states adopt laws and ordinances to raise the minimum wage.

Some might consider Amazon Go—and other Amazon forays into brick-and-mortar retailing, such as the company’s handful of bookstores, pop–up retailing facilities, and drive-up grocers—an admission that the internet cannot meet every need for obtaining merchandise. But Marcotte views the Amazon physical stores as a marketing ploy that obscures Amazon’s true mission of cutting fulfilment time for goods ordered online by creating a physical presence where customers can pick up their purchases. Having brick-and-mortar establishments also helps Amazon with fulfilment in urban areas where it’s risky to leave packages on a doorstep, he notes.

Other retailers could follow that strategy of providing consumers a way to order merchandise online but pick up at a physical location, Marcotte says. Walgreens, he observes, already has the stores and could add the online component. Walmart acquired the algorithm to do the job online, he says.

Besides, Amazon’s physical stores still face daunting competition from established brick-and-mortar competitors that aren’t nearly as weak as news reports have indicated in assessments of the last holiday shopping season, Marcotte contends. Despite the decision to shut down all 250 stores operated by The Limited and the closing of numerous Macy’s and Sears stores, January looked like the typical aftermath of the post-holiday season, he says. Stores usually close that time of year, and it’s a huge country where the number of closings adds up, he notes, adding that “nothing is forever in retail.”

Big Benefit or Big Brother?

Change is coming to retailing as merchants find uses for the location-based technology that seemed so promising just a few years ago, Marcotte says. When the tech was new, retailers had hoped to boost sales by sending electronic coupons to consumers who were near a certain store or near a certain product inside a store. They soon found that consumers didn’t respond as well as anticipated. But stores have since discovered another use for location-based tracking. If a shopper buys something wildly different from his or her usual purchases, then the technology—in the store, on the shelf, or even integrated into the product itself—can take a record of the transaction. That way, even if the shopper pays cash, the retailer or manufacturer can post ads for related goods on the consumer’s home computer screen, Marcotte says.

In another seemingly futuristic development, some stores—including the Container Store—are beginning to equip employees with headsets that can improve customer service, Marcotte says. When a customer approaches the employee to ask a question, for example, the headset picks up a signal from the customer’s smartphone and identifies the customer. It could also work with a voice print instead of a phone. The system can provide the employee with information on the customer’s purchase history that can help answer the question. However, the process strikes some people as invasive, Marcotte cautions. “Whatever privacy you thought you had is gone,” he insists, “and there’s not much reason to believe that it’s suddenly going to come back.”

For Olson, as a consumer, it’s an invasion of privacy that conjures images of Big Brother: “I just don’t like the idea of someone watching my every move, knowing every little thing about me, and what I’m doing.” That’s an issue retailers will have to work on, she suggests.

Another trend in shopping, omnichannel retailing—or unified commerce, as some call it—can make combinations of online and offline shopping seem like a single process to consumers. Some think of omnichannel as already well-established, but it still seems futuristic to other retailers and payments companies, Helgeson says. “A lot of acquirers and ISOs have stayed in a single channel, where they are either very good at e-commerce and card not present or very good in-store, but very few have a combined platform that works seamlessly across all the channels,” he says.

“I’ll editorialize a little for a second,” Helgeson says. “Our industry is so focused on the payment and the authorization and capture of that money that we forget about the consumer experience and forget about the merchant experience. And the whole world of how consumers shop is changing around us.” The payments industry should adjust to how the public is buying, not require the public to buy in ways that fit into the payments system, he declares. That change, he predicts, will usher in a new era of payments.

Ed McKinley is a contributing writer to Transaction Trends. Reach him at

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