The Death of the In-Store Purchase? Making Frictionless Payments the Offline Norm with Digital Identities

Posted September 29, 2017

The Death of the In-Store Purchase? Making Frictionless Payments the Offline Norm with Digital Identities

I think I’ve become slightly addicted to online shopping. The speed, simplicity and ease with which I can nail my weekly grocery shopping, stock up on light bulbs and get a next-day delivery for that forgotten birthday present makes life’s everyday tasks less dreary.

Indeed, many tech savvy consumers, and millennials in particular, are migrating further away from in-store purchases and resolutely remaining online. This is largely due to the near-frictionless digital experiences businesses and users have created; a perfect symbiosis of demand and supply that works for both parties. Businesses get more orders, less abandonment and better profits, and users get what they need, fast.

The offline world has a lot of catching up to do if it is going to maintain parity with this enviable consumer experience. Why can’t we, for example, walk into a shop, make our choices, and walk out again. It seems cumbersome and increasingly archaic to have to wait in line, make a physical payment, verify that payment and leave with our purchases when there is technology that could do it all for us. Imagine automatic cashiers that register a purchase and debit a bank account as we walk out of the store. This shouldn’t be a thing of the future.

Offline and online experience must merge if the ever-shrinking concept of in-store shopping is to survive. Not only will consumers demand that businesses move with the fast-evolving digital world, but it will also soon become the only way to compete with the gigantosaurus of eCommerce and its almost infinite warehouse of stock, range and availability. Of course, services, such as Apple Pay, are starting to change the way we pay in store, transforming our mobile devices into digital wallets, which is one step closer to frictionless payments. But I can’t help thinking that the opportunity is far larger.

One forward-thinking supermarket in the UK is pioneering an interesting alternative; offering fingerprint payment that scans the veins in your finger, apparently making it even more immune to hacking than standard fingerprint technology. The Costcutter store at Brunel University in London allows customers to scan their finger and leave, linking their unique biometrics to a payment card, which is then debited accordingly.

The benefit here is clearly the ease and convenience of using something you always have on you to shop and go. This low-friction approach certainly seems the way that many offline merchants will have to go to compete in the cutthroat world of retail. Biometrics, for all its inherent advantages, however, might not be the only option.

Imagine a near-frictionless shopping experience that uses digital identity intelligence to verify and authenticate a customer payment in a physical, in-store setting. It might sound transformative, but the technology is ripe for use and gives merchants an extremely accurate digital profile of everyone who walks into the store.

Consider, for example, whether merchants could verify a customer payment by correlating their device, location, card details and behavioral pattern with their trusted digital identity, built using the crowdsourced intelligence from cross-industry merchants globally, perhaps via a simple mobile app and an airport-like scanner as you leave the store.

With the advent of PSD2 in Europe just months away, this modern payment method could also be linked with a push notification as a customer leaves the store. Perhaps it could ask them to authorize their purchase with a fingerprint verification or scan of their mobile device.

Walking in and walking out of a store without the need to line up, verify and pay could soon be a thing of the past – by merging the online and offline shopping experiences and introducing a frictionless payment process to in-store purchases using digital identities.

But, if that happens, what’s to become of my online shopping addiction?

Rebekah Moody

Rebekah Moody

Director of Fraud and Identity, ThreatMetrix

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