Mobile POS Beta Site Fear Keeps Checkout Right By Exit

When the manager of a Florida hobby store was about to begin testing in-store mobile checkout as part of an NCR beta test in June, she envisioned using the devices throughout the store, to both free up POS space and give shoppers a faster experience. But like so many mobile-payment issues, those plans yielded to the reality of hosts of unanswered loss-prevention questions about the mobile payments.

When NCR on Monday (Sept. 26) introduced its Apple-based mobile in-store checkout module called CPMobile (it was actually from Radiant Systems, which NCR officially acquired on August 24), it went so far as to quote Hobby Superstore Manager Emily Mitchell discussing "eliminating lines and congestion at point-of-sale stations" and saying that she saw "a huge benefit in being able to have these mobile units and employees set up in different areas of the store to make the checkout process quicker and easier for those who want to purchase just one or two items. This technology also will allow us to better utilize space that once was used as a point-of-sale counter so that we can display additional inventory to generate more sales."

(Related Story: Traditional POS Sales To Plunge Because Of Mobile Devices, IHL Reports)

Although Mitchell still agrees with those goals and dreams—and indeed is still hoping to achieve them for the holiday season of late 2012—she ended up instructing employees to not use the two NCR Apple checkout units anywhere other than at an existing POS area right by the exit.

As mobile payments inch along with advancing efforts from Google, ISIS and Paypal, and with Apple debating its plans, retailers are trying to balance two concepts: the ideals of mobile-payment strategies with the mundane, practical logistics issues. And nowhere did those two concepts collide more clearly than in the one-location $3.5 million specialty store in Plantation, FL.

Some of Mitchell's questions: Does she now have to spend more money—or divert precious personnel during busy hours—to have someone stationed at the door checking receipts? Doesn't that send the wrong customer-friendly message? She now offers mobile customers a choice of a paper receipt or a printed one. Will they need a paper receipt, too, even if they want a digital copy?

More questions: How could someone at the door verify that the receipt is legitimate? For that matter, if the associate at the door is shown a digital receipt, how is he/she to know if it's a valid receipt—as opposed to a doctored image—unless the associate scans the receipt's barcode and runs a check to see if that item was indeed purchased in the prior 10 minutes?

The NCR devices use "any standard fourth-generation iPod Touch or iPhone 4 using a 3G or Wi-Fi connection," according to the NCR statement, and Mitchell said her store is using an iPod Touch running on the store's Wi-Fi network.

Using the popular Apple hardware for in-store mobile checkout is common; Lowe's, PacSun, Ann Taylor and Urban Outfitters are among the many already using Apple for in-store checkout. But, as Mitchell discovered, using the easily recognized hardware is not without its drawbacks.

She said some customers saw the associate using the iPod Touch to try and scan the customer's credit card and became worried that someone (hopefully, a store employee, but a nervous customer might not be certain) was using his/her personal device to scan their payment cards. "Some were very concerned. 'Is that someone's personal phone? I'm not letting my card be scanned by that thing.'" Customers are used to the appearance of a traditional POS and were freaked out by the more contemporary appearance.

To minimize that fear, Mitchell is having official store logos created that will adhere to the phones, to make them look more like official store devices.But that won't help the customer loss-prevention concerns. "We don't allow them to ring people up in the middle of the store, don't allow our people to ring customers up at the sales counters," Mitchell said. "Our store is so big that we won't know if someone has paid for something or not. We haven't figured out a way" to verify purchases.

From NCR's perspective, mobile-payment anti-theft efforts can borrow many tried-and-true tactics from their POS ancestors, including placing paid labels on products once scanned, placing products in logoed carry-out bags and "securely closing the packaging, taking advantage of [approaches such as] receipt-on-label," said Jack O'Malley, senior manager of product marketing for NCR.

Should greeters/security guards verify digital—and, for that matter, paper—receipts at the door? There are key business questions about whether that's a good idea, given how much time it would likely take (especially during busy periods such as holiday sales, which are—painfully—the exact times when mobile in-store checkout would be most attractive) and the impression of lack-of-trust it could convey. Although some of that could be statistically minimized by simply making such checks random or only when the guard has a specific suspicion (that last one is a customer relations and legal nightmare in the making), the fact is that mobile devices in the hands of door-checkers enable the type of verification that is simply impossible with traditional POS.

NCR's O'Malley, who had been with Radiant at the time of the acquisition, laid out how such verifications could be done.

"Specific details about an individual transaction should be included on a receipt like cashier ID, time/date of transaction and ticket ID identified by both a visible number and a barcode that can be easily verified within the system. Because mobile tickets are not stored locally, but immediately updated on the POS server, they can then be retrieved from anywhere," O'Malley said. "So if associates are stationed by the door and they wanted to conduct a spot check on a particular customer, they could then utilize a mobile device to retrieve an already finalized ticket by entering the ID, or scanning the barcode, on the receipt and validating the receipts match."

Greg Buzek, the president of retail technology research house IHL, pointed to other logistical challenges for moving the purchase process into the middle of the aisle. Associates can certainly handle the mobile device plus print out paper receipts from a nearby printer station or by wearing a wireless belt clip printer ("Geeks, don't leave home without it"). But space and supplies will still be needed—"You'll need some sort of cash wrap, a place and a means to take the security tag off, fold the purchases, put them in a bag"—and that's going to make the middle-of-the-aisle convenient checkout a lot less convenient.

As for Hobby Superstore, although Mitchell's store has been testing two of the mobile units since June, she said it has mostly been to get used to the devices. "The real test is going to come in Christmas-time."

As for going back to the original plan of truly store-wide distribution, Mitchell said: "At this point, that's our hope for next year." For retail mobile payment with large chains, those words are going to sound very familiar.