With the UK high street experiencing its worst footfall in six years, retail brands are working harder than ever to convert shoppers into buyers – and payment is a big part of that. If bricks-and-mortar stores are to compete with online retailers, then payments need to be just as convenient and seamless.
The UK’s retail market is one of the most innovative in the world but when it comes to payments, there are a few global trends that have yet to hit our stores. Let’s look at the three fastest-growing trends and assess which ones are likely to spread to the UK high street.
Slicing it like a Swede
Payment ‘slicing’ is a bit like catalogue shopping; you pay the first installment at the point of purchase; your item is delivered; and then you pay the remaining installments over an agreed time period.
Swedish-based Klarna is the most prolific name in this sector; this month it was named the EU’s most valuable fintech company. Despite only arriving in the UK last year, it has already partnered with big high street brands – but only online.
In Nordic countries, Klarna has advanced into physical stores and is even used to pay for veterinary and dental treatments. Could the UK follow suit?
Paying in installments is not a new concept for UK shoppers, who are used to store cards, credit cards and catalogues. Plus, it really captures the zeitgeist: skint millennials + the ‘buy less, buy better’ movement = a collective desire to buy things that are too expensive for one pay packet.
With brands as diverse as Topshop, Nails Inc. and Jessops already signed up online, surely it’s only a matter of time before Klarna moves into IRL stores.
Seamless in Seattle
Taking the idea of seamless shopping to its logical extreme, last year Amazon opened its first checkout-free store in Seattle and has since opened 13 more across the US.
Sainsbury’s has opened a similar checkout-free store in the UK, but it’s not quite as seamless as Amazon Go’s ‘just walk out’ shopping experience; customers are still required to scan everything on their phones (or a portable scanner) and then download a QR code to pay.
Amazon Go is rumoured to be opening a store in the UK, but it’s hard to see it becoming anything more than a novelty concept. Not only is the expensive technology unique to Amazon, but many Brits are still getting used to self-service tills, which were introduced to the UK over 15 years ago.
‘Scan and go’ tech on the other hand, is much more likely to be widely adopted, as it can be easily implemented and used alongside self-service and staffed checkouts. It’s important to give shoppers a choice, or else brands risk alienating customers – even Amazon Go has decided to let customers pay with cash at its latest store in New York.
Somaliland’s SMS economy
Just as you can donate to charities by SMS in the UK, so shoppers can send money to merchants by SMS in other parts of the world.
This payment method has been embraced all over Latin America and Africa, and has really taken off in Somaliland. Why? Somaliland, which isn’t officially recognised as a country, doesn’t have a formal banking structure – and you don’t need a bank account to pay by SMS. Payments are handled by the mobile network and added to the customer’s bill.
It’s hard to imagine SMS payments becoming commonplace in UK shops, as we’re used to paying with our mobiles in a different way. But as we inch closer to a cashless society, SMS could be necessary to make sure we’re not leaving behind the 1.2 million adults that don’t have a bank account. Even the most basic of phones can send a text, which would make SMS the most accessible smart payment option in the UK.
Smarter, faster payments for all
So, what are the odds of seeing these payment methods on the UK high street? We’re more likely to see the first two, as they’re more familiar. British shoppers can already use ‘scan as you go’ technology at Sainsbury’s (plus Co-op recently announced plans to launch the tech in 30 of its stores by the end of this month) and pay with Klarna online – but it’s unlikely we’ll see SMS payments take off in the UK, due to our stringent banking system.
Whatever the future of retail payments holds, brands must remember that not everyone will be able, or happy, to use new ways to pay. As Amazon Go’s decision to accept cash proves, you can develop the fanciest tech in the world, and you’ll still need to hire someone to give customers their change.