verifone - mobile payments innovation

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HOW tablets and smartpHOnes WillrevOlutiOnize retailReimagine retail with VeriFone NFC and mobile solutions

R E I M A G I N E R E T A I L 2 J U N E , 2 0 1 2

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i n t r O d u c t i O nRetailers will soon have to change the way they look at their point-of-sale (POS) estates. In an age of mobile commerce, where consumers can shop with their smartphones inside your own store, get reviews, product information and perhaps even better prices somewhere else, a retailer’s POS infrastructure is the main weapon to reach consumers in store and the best chance to influence behaviour favourably for a purchase.

Few would argue that payment technology now plays a powerful role in retail strategy. But while transaction speed, security and reliability are increasingly vital, they come at the end of a shopper’s journey when most decisions are already made and the chance to influence a consumer has mostly passed.

As retailers look to engage with today’s more mobile-orientated convenience-focused consumers, most accept that multimedia, touch screens, self-service and mobile- and tablet-based retail platforms are all now crucial to their long-term success.

And most also realize that the communication with a consumer’s own smart device will be essential in the future. But while many retailers today have consumer mobile apps for smartphones, these are usually not much more than online catalogues, unable to communicate to retail systems in store and leverage the consumer’s presence in a meaningful way.

That will soon change as Near Field Communications (NFC) is adopted by major phone manufacturers and millions of phones reach consumers equipped with mobile wallets and mobile apps enabled for commerce. Retailers may finally be able to connect directly to the consumer’s mobile phone while in store and use that as a tool for customer loyalty and service enhancement.

And, that will be combined with a new generation of mobile payment devices based on consumer tablets and other smart devices that complement the countertop POS. These devices will allow associates to take the checkout, the entire back-office and online presence of a retailer right to the consumer, anywhere in the store. The opportunity for exciting, new interactive sales tools, personalized promotions and integrated cross-channel marketing is endless.

Industry leaders are already implementing the latest POS innovations to deliver better customer

services, sales tools and support. And these leaders view their POS estates as POI estates, their main point of

interaction with consumers.

The challenge for retailers will be to overcome integration complexity to harness and use new technologies successfully without compromising

key store operations and security that run through the POS infrastructure. VeriFone has been leading the mobile revolution in retail systems and is your

best guide on this journey.


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c O n t e n treimagining retail 4

Leveraging Consumer’s Smartphones in Stores 5

Mobilizing the POS 7

The Power is in the Apps 9

Six Steps to Reimagining Retail 11

Conclusion 12


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reimagining retail Traditional stores remain the engine that drives the retail industry. However, society’s rapid adoption of online shopping is fast shifting consumer expectation as to what constitutes a store. Younger consumers simply don’t distinguish between physical and virtual channels the same way that older generations do. Consequently, retailers need to redefine the in-store experience in order to stay relevant. They can no longer target 21st century consumers with 20th century stores and technology.

To compete with e-tailers, traditional brick-and-mortar retailers need to find innovative, new ways to link the virtual and physical experience, and major trials are already under way. In fashion outlets, mirror screens can now function as life-size tablets— allowing customers to choose and view themselves in different

POS Platform Expansion:1 Mobility is Top of Mind

1 Boston Retail Partners 13th Annual POS Benchmarking Survey, January 2012 – North America-based retailers

outfits without undressing or waiting for access to fitting rooms. With built-in, touch-screen technology, these screens also allow customers to scroll through options, select and order for fast and easy payment/collection at the register.

But custom technology innovations like these, while appealing, can be expensive and difficult to implement. Most retailers have concluded that the most efficient way to reimagine the retail experience is by leveraging their existing technology investment.

The POS infrastructure is still a retailer’s biggest IT investment. In a recent research study, Boston Retail Partners shows that retailers have two main targets for expansion of its capabilities. They want to leverage a shopper’s own smartphone for payment transactions at stores and they want to turn the POS mobile and bring it to customers anywhere in the store.

Centralized POS platform

Alreadyimplemented

Centralized platform

Thin client Shoppers’ smartphones

utilized for checkout

Mobile POS Software as a service

Cloud or virtual POS

Plan to implement in <2 years

Plaln to implement in >2 years

No plans to implement

8%12%

80%

11%7%

4%

78%

52%

19%

7%

22%

38%

4%

8%

50%

12%8%

12%

68%

23%

15%

15%

46%

13%

17%

23%

47%


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LEvERAging COnSuMERS’ smartpHOnes in stOresIn many countries today, there are already moremobile phones than people. Smartphones are replacing PCs for online browsing. According to PayPal, in the UK alone, 14 million adults regularly shop via mobile, and consumers will spend £2.5 billion shopping on their mobiles in 2016 – a growth of 42% each year2.

The ability of mobile to transform the retail experience is immense. Not only does it enable consumers to shop on impulse wherever they are, but by connecting to the Internet, they can use their mobile device while in store. This leverages a retailer’s powerful back-end and online presence and allows consumers to purchase heavy items with free delivery, or find items that might be out of stock.

Mobile also makes them susceptible to impulse purchases, particularly with the increasing prevalence of location-aware smart devices. Companies such as Groupon, where stores grant discounts if enough people sign up for them, and Foursquare, which offers price cuts to users who check in at specific locations using their smart devices, are already exploiting these cross-over platforms.

Mobile as the bridge between online and physical world Many retailers are now trying to leverage mobile by deploying their own consumer mobile apps for smartphones and customized mobile websites. These work as an extension of a retailer’s online presence. Consumers are able to browse through the retailer’s mobile websites and even order products online.

The problem with these apps is that they have no connection with the physical world. In this field, retailers have been experimenting with QR codes. With QR, retailers can effectively create stores in physical locations without any product at all.

2 Source: The UK Mobile Retail Study, 2011, PayPal

For instance, in some cities they are experimenting with full wall billboards that act as convenience stores. Commuters simply use their phones to scan QR codes on the food item they want as they walk by. After completing the mobile transaction, their groceries will be delivered and waiting for them when they get home.

Consumers can scan these 2D barcodes with their mobile phone camera so they can be directed to product info, an advert, voucher or special offer. According to a recent consumer survey from TolunaQuick, 19% of consumers have already scanned a QR code, and if the 4549% increase in uptake between 2010 and 2011 is any indication, they will continue to be a dominant force in 20123.

The drawback of QR codes is the inherent lack of security in its transactions. QR codes have no embedded security features and can easily be counterfeited by simply pasting a new barcode on top of an old one. That limits their applicability and the scalability of business cases. But, new technologies can take this model to a complete new level.

nFC and mobile wallets revolutionize commerce NFC technology is being integrated into mobile phones and is being deployed in record numbers around the world. Leveraging smart card and contactless technology, NFC enables consumers to simply wave the phone at a NFC-enabled payment device to transfer information instantly and securely. According to IMS Research, global shipments of NFC smartphones should reach 80 million during 2012 and by 2016, 700 million units should be shipped every year, according to Berg Insight4.

All these will have the ability to wirelessly exchange information and make financial transactions in stores and online— effectively turning the mobile device into a digital wallet. Web giant Google launched their NFC-enabled wallet in 2011 lining up major retailers including American Eagle Outfitters, Bloomingdale’s, GUESS, Macy’s and Toys“R”Us. All were enabled to accept Google Offers, mobile loyalty and payments sent via consumers’ mobile phones, in addition to payments via MasterCard’s contactless PayPass system.3 Source: eConsultancy 2011 online survey - UK 4 Source: Shipments of NFC-enabled handsets reached 30 million units in 2011, March 26, 2012, Berg Insight

QR codes show the way for physical connectivity of mobile, NFC will revolutionize it.


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Meanwhile, phone carriers AT&T, Verizon Wireless and T-Mobile, also in the United States, have formed a mobile commerce venture called Isis that start deploying millions of NFC mobile phones with their own mobile wallet starting in the summer of 2012. Isis has forged relationships with all four major payment networks and major issuing banks such as JPMorgan Chase, Capital One and Barclaycard US.

The appeal of NFC and mobile wallets is a global one. Mobile phone operators in multiple countries are gearing up for the deployment of NFC wallet payment around the world. That includes most of the big global mobile telcos such as Vodafone, Telefonica, Orange and T-Mobile. Europe is the region with most commercial launches and roll-outs planned, including the United Kingdom, Turkey, Poland, France and Spain. Asia is not far behind with developments in Singapore, South Korea, China and Japan.

All mobile wallets offer retailers the ability to reach consumers anywhere with location-based and personalized promotions and offers. The intuitiveness of “touch-and-go” NFC communication allows for faster reads of tags than QR codes, but most importantly the embedded security of NFC technology allows retailers to deliver significantly more value to consumers. Retailers will be able to drive traffic to stores via targeted and location-based promotions using NFC-enabled smart media and posters in malls and other high-traffic areas. Opportunities in store are just as exciting.

In the next few years, consumers will start to see smart posters and NFC shelf tags strategically placed around the store. Customers will be able to collect points, validate promotions and receive retail alerts direct to their phones as they walk through the store or venue. NFC will also make redemption of vouchers and coupons at the POS fast and hassle free. All of this will allow retailers to get closer to their customers.

Once NFC takes hold, it won’t be long before retailers begin to leverage its ability to put their brands into consumers’ pockets.

NFC technology gives merchants the potential to build smart applications and NFC-enabled services around their payments platform. Combining NFC technology, mobile apps and integrated back-end systems, payments will open the door to a new era of micro-targeted, one-to-one selling and loyalty applications.

veriFone: The leading enabler of nFC and mobile wallets in retail VeriFone has taken a front-row seat during the latest developments in mobile technology. VeriFone powers 12 of the 14 retailers that launched Google Wallet in the US, enabling Google offers and loyalty at the POS. VeriFone

is working with all leading wallet brands globally including the Isis mobile payments joint venture, to make sure consumers will be able to pay and redeem offers.

The VX Evolution payment devices are all NFC/contactless enabled—ready to switch on new capabilities as soon as retailers need it. What’s really exciting is what retailers, and particularly their marketing departments, will do with these consumer-focused payment solutions. The VX Evolution devices also incorporate full-colour touch screens with multimedia capability, fast processing and optimsed memory – everything needed to show video, deliver promotions and communicate other digital platforms in a meaningful way.

In addition, VeriFone delivers a full suite of tools for NFC and mobile wallet acceptance at the POS, which is essential when

retailers need to manage multi-function wallet applications and handle mobile offers, coupons and promotions in multiple formats in addition to payments.

VeriFone enabled 12 of the 14 retailers that launched Google Wallet with mobile offers, loyalty and payment capability.

NFC Mobile Wallets promise a new level of interaction between merchant and consumer.


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mObilizing tHe pOsRetailers are implementing mobility right now to improve customer service and store processes in multiple areas and functions:

store associate mobility plans5

A mobile POS enables retailers to improve customer service instantaneously by bringing the POS to the consumer anywhere in the store, as well as reducing the overhead and expense of purchasing additional registers. And, that’s just the start.

Once sales associates are equipped with advanced mobile technology at their fingertips, retailers can attack multiple fronts simultaneously. On-the-spot inventory management, up- and cross-sales, customer loyalty and much more made possible with an advanced technology solution in the hands of associates. Retailers are able to radically improve the store experience, selling the same products with the same sales force as before.

5 Source: RIS/IHL Group 2012 Store Systems Study – North America-based retailers

Mobile POS with tender

Currentlyusing

Inventorymanagement

Taskmanagement

Line busting with suspend

Messaging HR

Within 12 months 12-24 months 24-36 months

9%

19%

9%

9%

19%

25%

12%2%

14%

20%

22%

3%

13%

28%

13%

7%

30%

28%

13%

3%

10%

31%

31%

3%


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Retailers want the latest consumer devices enabled for enterprise use When asked which systems retailers want to deploy, retailers are categorical. They do not want the old, clunky systems of yore with poor user interface and connectivity and usually single-use applications. Retailers want the latest in consumer gadgetry adapted to their own needs. And, tablets and smartphones are on top of their list.

Operating Systems Preferred by Retailers6

One of the main advantages of using popular consumer devices is that the young and trendy consumers that love smartphones are the same people who work at retail stores. They are used to these devices, and that cuts down on training. Also, popular operating systems of leading tablets and smartphones have established app developer networks, making it easy to expand the capabilities of the device in the future.

And then there is the “wow” factor. With multimedia capability, colour touch-screen displays, cameras and wireless connectivity, tablets make the ideal sales device for staff. The really clever part is integrating this mobile functionality with in-store stock systems, payments platforms and fashion-specific applications.

6 Source: RIS/IHL Group 2012 Retail Embraces Tablets Study – North America-based retailers

Retailers need enterprise-ready consumer devices The challenge for retailers is that their POS infrastructure is the backbone of store operations. They need to have 100% confidence that new devices added to this infrastructure will run seamlessly with existing systems and will not disrupt store operations in any way. Retailers are also anxious about the durability of tablets and other smart mobile devices in a rough retail environment.

Points of Concern to be Addressed on network-Enabled Tablet Deployments in Retail7

Especially important for retailers is the need for security and the assurance that the new, consumer-based devices will not open the network to attack, which could be extremely damaging to a retailer’s image and pocketbook.

7 Source: RIS/IHL Group 2012 Retail Embraces Tablets Study -– Leading US-based retailers

Apple iOS

Windows

Google Android

Blackberry

webOS (HP)

71.7%

58.5%

49.1%

13.2%

7.5%

Device security

Enterprise security

PCI compliance

ROI/total cost of ownership

Managing multi-use by associates

Break/fix device maintenance

Loss caused by audit

Shrink caused by theft

Users downloading insecure apps

64.2%64.2%

58.5%


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PAYware Mobile Enterprise turns smart devices into secure mobile pOs VeriFone’s PAYware Mobile Enterprise (PWMe) is an award-winning solution that enables retailers to transform consumer tablets and smartphones into secure mobile POS devices for payment and more. PWMe includes a secure card encryption sleeve, with EMV PIN pad and a 2D barcode imager that slots onto a smart device, enabling it to perform a variety of applications including card transactions, mobile POS and queue-busting. PWMe is also enabled with contactless/NFC technology to create a two-way communication between the retailer’s mobile POS and a consumer’s NFC-enabled mobile phone.

PAYware Mobile Enterprise allows retailers to create a checkout wherever, whenever. The technology takes mobility to the next level, creating an end-to-end solution to increase speed of service, create new revenue opportunities, enhance a retailer’s

brand and build customer loyalty. Additionally, PAYware Mobile Enterprise can be made into a powerful tool for consumer engagement and retail management with the addition of VeriFone GlobalBay retail apps.

tHe pOWer is in tHe appsRetailers enabled with mobile POS devices have the opportunity to do more than create mobile checkouts. The same devices used to accept payment can enable a number of apps that help associates engage consumers anywhere in the store and improve consumer experience. These devices will become a tool for complete management and interaction in the store with their own associates and store management.

A day in the life of a the retail associate of the future Imagine a day in the life of a retail associate equipped with one of these devices. The associate can start the day by logging into a tablet-enabled POS, getting an acknowledgement of “check in” and receiving from the tablet any messages from management.

There could be new training videos explaining a new promotion or a new application being rolled out to all mobile POS tablets.

The associate would then start the workday and, while performing the usual activities, keep an eye out for customers that may need assistance. The associate would approach a consumer interested in an item and check inventory to see if the item is available in the desired size and color by browsing the online catalog. If the item was not present at the store, he could have it shipped to the customer’s home from a central location or another store and use the EMV-enabled add-on to the tablet to perform a secure chip and PIN transaction. At the end, the associate would enroll the customer in the store’s loyalty program.

Later, the sales associate could be approached by a consumer asking for suggestions on an item. The associate would tap the consumer’s NFC mobile phone to its NFC-enabled tablet and check if the consumer already participates in the store’s loyalty program. That would allow him to access the profile of the consumer online and get automatic recommendations of items. Upon deciding what to buy, the consumer would make the purchase by just waiving the NFC phone at the tablet to make payment, redeem coupons and earn loyalty points. New coupons would be automatically sent back to the consumer’s mobile phone.

At the end of the day, the sales associate could check his performance against other associates and write in the company blog about what he learned in store today. All associates and management would get a message with the blog entry in their next check in.

With PAYware Mobile Enterprise, retailers get everything needed for tablets and smartphones to securely process transactions and deliver tailored offers on the spot.

Mobile POS devices not only accept payment, but they also can be used to instantly check

inventory, consult an online catalog or sign up new loyalty customers.

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veriFone globalBay: The future arrives today VeriFone GlobalBay’s mobile retail solutions can significantly enhance retailer-to-consumer interaction. The patented technology platform generates tangible ROI by driving store traffic, increasing units per transaction (UPTs) and improving the consumer experience.

Clienteling: Know your customer, make the sale Clienteling will become a core part of many high-street retailers’ future strategy. Just as internet shoppers who have purchased before are recognised as soon as they click onto a website, it won’t be long before retailers will be able ‘know’ their customer as soon as they enter the store. Through clienteling, VeriFone GlobalBay mobile apps and integration services can even provide a single, centralised solution for retailers to manage all aspects of customer relations; one that lets sales staff identify individual customers and access their preferences and buying habits in real time.

Retailing: Scale interactions The VeriFone GlobalBay retailing application enables retailers to scale interactions with customers without the need to add additional store associates. It also provides an additional channel to deliver information to the customer. The retailing app can offer basic features such as program and card enrollment, product and price check, promotions and coupons to more sophisticated features such as videos and adverts.

mPOS: Sell anything anywhere Recover abandoned sales, capitalize on pop-up store opportunities and provide a better customer experience by moving away from fixed point-of-sale registers. The VeriFone GlobalBay mPOS app extends your current point-of-sale system to mobile devices. Boost sales and increase revenue by accelerating checkout and eliminating purchase abandonment while improving the overall buying experience with personalized customer service.

inventory Management: instant visibility Gain instant visibility to in-store inventory while saving hours of store associate time currently spent on inefficient inventory management processes. The VeriFone GlobalBay Inventory Management app extends existing inventory system functionality to mobile devices. This powerful capability will enable retailers to better manage routine inventory management tasks from the shop floor.


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six steps tO reimagining retail1. Be prepared to exploit nFC platforms With smartphone manufacturers now committed to NFC, it’s no longer a ‘chicken and egg’ situation. Consumer enablement will force retailers to accept NFC in order to remain relevant to their lifestyles. By being NFC enabled at the outset, retailers can gain considerable competitive edge with customers and also benefit from close working partnerships with key industry players before the market becomes too saturated.

2. Remember POS is not just about payments NFC delivers two-way, real-time communication between the merchant and the consumer. With NFC, merchants and retailers of all kinds can turn their point of sale into a much more valuable point of interaction that provides customers with intelligent and ultra-secure checkout capabilities.

3. get creative at the POS Mobile will open up new opportunities for loyalty, promotion and brand building. This requires a new level of creative input and the involvement of marketing and communications functions. Make sure all relevant departments across the organization are engaged, informed and up to speed with mobile commerce and what it means to them and their activities.

Retailers may also need to consider additional investment or re-allocating marketing budgets into new promotional activities that can leverage mobile commerce as a communication and fulfillment platform to drive new competitive advantage and revenue streams. For example:

• Programs that allow consumers to use virtual e-gift cards, participate in loyalty schemes and earn rewards at the POS

• Materials and apps designed to exploit two-way communication between the handset and POS device or NFC stickers in store to transmit e-vouchers, loyalty rewards, payment and promotional messages

• Provision of links for social media fan favorites and group discount offers

• Gathering customer data efficiently through various payment devices for improved consumer analytics

• Enabling alternative payments methods to create mobile POS in and out of the store

4. Be socially active Social media can help brick-and-mortar retailers reach out to customers and increase brand awareness, but also gauge interest and needs to help turn around shops at risk. Facebook can serve as a focus group, allowing retailers to learn about customers’ preferences. Group buying websites bring awareness to a company’s brand while taking advantage of promotional activity. Social media also empowers retailers. By listening to customer feedback, both good and bad, retailers can find the right target group for products/services and learn which innovations will appeal most.

5. Choose a partner with proven ability For mobile commerce to reach its potential, many payment devices currently in the field will need to be upgraded. It isn‘t simply an issue of adding an NFC reader, it requires deep software richness at the POS to interact with customers and manage a services-based model encompassing new applications and deployments. Retailers should be wary of new supplier and integrator entrants who may be attracted to the size and volume of the market, but who may lack the necessary knowledge, financial stability or longevity to see their projects through successfully. By opening up discussions with established vendors, such as VeriFone, retailers will be better placed to understand the impact on existing operations once NFC goes live.

6. Leverage existing spend Many retailers are currently replacing their POS estates in order to comply with the latest PCI standards. Stores with regular, low-value, high-volume cash transactions may also be looking to upgrade devices to take contactless payments. Any investment in POS infrastructure today should include a roadmap for NFC enablement. Without doing so, retailers risk being left behind. They may also eventually be forced, by stakeholders and customers, to commit to future upgrades which would incur a higher cost than a planned, phased roll-out that takes into account existing POS evolution roadmaps.

From in store to online and now mobile, the challenge for retailers is how to unify their customer interface. As consumers spend increasing amounts of time online, retailers are now focusing on mobile platforms as the “glue” that ties physical products and stores to the digital world. Mobile promises a shift to a customer relationship model that lets retailers know exactly who their customers are, and allows customers to opt in and define how they interact with the retailer.


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cOnclusiOnThanks to new developments in technology, innovation will play an increasingly powerful role in retail strategy. For the consumer, these new platforms will bring the allure of greater convenience and better service – everything from electronic wallets on a mobile phone to the opportunity to easily cash in rewards and discounts electronically.

For retailers, where image, promotions, seasonal pull and loyalty are important, new mobile and POS devices and applications will drive footfall with smart apps and engaging new services. VeriFone is already helping forward-thinking retailers prepare for these opportunities by ensuring that all its latest payment solutions are NFC/contactless enabled with full colour and multimedia screens, as well as ample processing power to support these new sales initiatives and apps.

VeriFone also believes it is crucial that retailers begin aligning retail NFC within their IT strategy now in order to take advantage of the full potential of mobile commerce and to make the mobile wallet a viable reality for customers. Technology such as augmented reality, where you can walk by a shop window and see yourself in an outfit from the store, is a great example of how payments and retail technology can progress. Imagination and creativity are key to seizing these opportunities to create a new and more personal in-store experience. Retailers’ success will come down to brand differentiation and connection with their customers through all the channels. The ongoing challenge will be to find partners who can tell the story with authenticity and consistency.

VeriFone understands that payments will become a more integral part of the sales process and is already providing the hardware, processing power, apps, connectivity and digital functionality to help retailers compete effectively for the hearts and minds of shoppers. Through its holistic approach to mobile, NFC and integrated payments, VeriFone will continue to evolve the POS to deliver intelligent ideas and solutions that make retail stores more compelling and interactive for everyone.

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© 2012 VeriFone, Inc. All rights reserved. VeriFone, PAYware Mobile Enterprise, GlobalBay and the VeriFone logo are either trademarks or registered trademarks of VeriFone in the United States and/or other countries. All other trademarks or brand names are the properties of their respective holders. All features and specifications are subject to change without notice. Reproduction or posting of this document without prior VeriFone approval is prohibited. 5/12 46301 Rev A FS

Successful retailers will leverage all aspects of consumer and POS mobiity to create a new

shopping experience.

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