Qualcomm interview: Reimagining retail - digital transformation of payments

The world of retail has changed beyond recognition in recent years, and the pace of change has only been accelerated by the pandemic.

From the growth of e-commerce to the impact of social media, technology has underpinned an unprecedented shift in the relationship between retailers and consumers.

But while e-commerce has been one of the biggest drivers of change, the resulting trends have left a legacy on how physical stores will look too.

The desire for convenience and the evolution of IoT tech means digital payments will shape retail both virtually - and physically - in the future.

Reasons for growth

The surge of online retail has been one major driver of change, accounting for 20% of all retail sales 2021, up from just 8% only a decade earlier.

Much of the recent surge in growth was due to the impact of Covid. Lockdowns meant not  only were physical stores closed in many parts of the developed world, but cash was also regarded as a way of spreading the virus.

As a result, figures compiled by IBM revealed the pandemic accelerated the move towards e-commerce by five years.

The introduction of new technology on the front and back end of the payment system, effective security protocols, as well as changes to the payment mix with things such as digital wallets and crypto have also contributed to this acceleration.

A desire for more information about consumers is also a driver, with 90% of banks’ useful customer data coming from digital payments, according to PwC.

Beyond online

But technology has not just impacted on e-commerce, it has changed physical stores too. The internet has only increased an appetite for convenience which the physical retail sector has had to embrace.

Consumers are now also better informed about what they want thanks to their ability to research online. A survey found 39% of shoppers will not buy in-store without reading online reviews first.

The industry is moving towards a more omnichannel approach which includes both online and offline, a combination to referred to as ‘clicks and mortar’.

It describes a model where both physical stores and an online presence interact seamlessly. In this new world, stores are more than just a place to browse and buy, but to pick up orders and interact with products.

To enable this transformation where consumer demand for the convenience and choice of online is replicated on the ground, retail stores will have no choice but to embrace new technology. Central to this, will be how they take consumer payments.

Payment trends

Long gone are the days when a customer would pay for something with cash at a register. The evolution
of payments has seen breakthroughs in technology which have benefited both consumers and the retail sector.

From card readers to biometrics, QR codes and crypto the possibilities for making payments are more diverse than ever.

“This has accelerated in Covid,” says Ketal Gandhi, Global Lead Retail Payments and Signage at Qualcomm.

“The US, which is usually behind when it comes to contactless payments compared to the EU and Canada, has caught up in the Covid period. In Covid, many more groundbreaking trends emerged.”

The pandemic accelerated not only the roll-out of the technology, but a willingness by consumers to embrace it.

Changing store designs

These changes to payments methods are also having an impact on the physical layout of stores. There no longer have to be rows of customers funnelled towards a few cash registers.

Technology means shoppers can make purchases in a diverse range of ways which frees up more space for the store to fulfil other roles, such as for picking up online orders and sampling products.

“Retail stores are improving experiences for consumers with multiple shopping modalities.” Ketal adds.

“There are multiple ways of checking out in the store. There is self-checkout, scan and go, buy online and pick up in store, there is completely autonomous checkout with cameras and AI.”

“In addition, some retailers even offer options such as line busting so that their staff can check out and accept payments anywhere in-store where the customer wants and Endless Aisle for customers to order in- store and get it delivered.”

The impact of PCI-CPoC

A milestone in Point of Sale (PoS) payments was the introduction of PCI-CPoC. A security standard approved by the PCI Security Standards Council (PCI SSC).

It enabled merchants to accept contactless payments with commercial, off the shelf (COTS) mobile devices such as tablets and smartphones which has near-field communication (NFC).

“This is huge” Ketal says. “As we use our phones and watches and our IoT devices to make payments and those payments are accepted on another smart device. Qualcomm is powering all of these devices.”

The ramifications for this are far reaching and enable merchants of every size to be able to take contactless payments, without having to invest heavily in specialist technology. And the figures bear out that change.

According to a Nilson report, 135 million PoS terminals shipped in 2020. The majority of these were Android based.

Evolution of payment ecosystems and the need for security

Digital payments appear simple to the consumer - at least if everything is working correctly - but the whole process is underpinned by a complex network of companies all interacting at the same time.

Acquiring banks, terminal providers, card networks have to work in concert to enable payments to go through safely and security.

But this complex web provides the opportunity for criminality.

“There’s a saying that wherever the consumer goes, fraudsters follow them.” Ketal says. “Payment, anti-fraud and verification industries have seen tremendous growth because of this.”

Security for secure payments revolves around three central pillars:

• Device security

• Identity

• Data security

This security remains a prime source of concern for consumers. According to one survey, more than two-thirds of digital payment users (69%) said they had security concerns.

Effective security must involve a range of techniques as part of a system-wide approach.

Peripheral security tech, cellular and WiFi security, key management solutions are all part of a wider ecosystem that helps secure all payment transactions across multiple devices.

Looking ahead

The growth of e-commerce accelerated by the pandemic, new technology and changing consumer habits mean the use of digital payments will only increase in the future.

This will have an impact on both physical and online shopping, with an omnichannel approach creating a seamless retail experience for modern consumers.

But with concerns about security still one of the major barriers to uptake, ensuring transactions are secure will be a challenge which companies must respond to effectively.

About Qualcomm

Discover the impact of digital transformation from stockroom to shopping cart, and back office to back end.

Qualcomm Technologies retail solutions are a comprehensive suite of connected products utilising IoT to help keep retailers informed and agile across their operations.

Its solutions, tying online to offline, drive efficiencies and elevate retail insights to create more rewarding retail experiences for the retailer, store associates, customers, and brands.

Further information here.