New technology is a strange beast. When it doesn’t exist, we dream of it and when it does exist, we cannot imagine what life was like without it. Sometimes it hits you in the face like a lightbulb moment, and in other situations it just creeps up on you and, in osmotic fashion, just creeps into your life without you even realising. However, when it does just appear and sparks the wow factor, it can create a game changing moment where you wonder how you ever coped in life before it existed. There are too many examples to mention as, over time, those moments have become more frequent, but the latest advancement is the stuff of fantasy courtesy of Amazon Fresh’s arrival here in the UK and the wider implications it has for the retail and payment industries. 

Amazon Fresh is a supermarket like any other with a slight difference. There are no cashiers, no beeps, no scanners, no queues, no tills and it’s all powered by something called “Just Walk Out” technology. As you walk in, you simply open your Amazon app, go to the Fresh Section and generate your QR code. Scan the code over the entrance gate, in the same way you would a boarding pass at airport security. The gate opens and in you go. Every cynical inch of your mind is wondering how this whole thing works, but you just have to trust the process. Once you’ve picked up your items, you simply walk out. And that, as they say, is that. Soon after you leave, you receive an email with your receipt of what you spent and the card (linked to your Amazon account) from which the payment has been taken.  In 20 years time, you have to wonder if we’ll look back and laugh. “Remember the days where we had to scan every single item through a till and pay for it with a credit card,” just as we look back now and say remember when music was physical...

Now let’s try to understand the implications of this insofar as the retail and payment industries are concerned. Once again we find ourselves at another crossroads. How do we even begin to unravel just how important this type of technology is? The first question is whether this is deemed as a point-of-sale transaction, or an ecommerce ticket and what implications does that have around fraud and chargebacks? The customer is physically in store, yet the payment is in app. At present app and wallet-based payments in store still require a POS machine thus linking to a Cardholder present transaction. Amazon have of course disrupted everything as you’d expect by creating an ecommerce payment via an instore experience without the need for a POS machine thus reducing all forms of friction when it comes to the shopping experience.

As more and more retailers embrace this type of technology it will negate the need for cashiers, thus creating more space on the shop floor and therefore more room for stock. It will also reduce the need for staff thus reducing costs. Where it may also have significant impact is that it will reduce the need for point-of-sale terminals which could affect payment firms who offer cardholder present solutions.  Could a chargeback be defended on the basis that there is CCTV showing the customer in store? Or via the IP address of when the payment was taken? No doubt Amazon have figured all of this out so it will be fascinating to see how this technology is rolled out by Amazon into other areas (retail maybe?) or by other businesses such as Sainsbury’s who have now implemented similar technology in some of their Central London stores. 

Perhaps this is the first big post Covid move. A solution where there is zero interaction with people who are touching and scanning your items, passing you a receipt, or creating human to human contact. That said back in 2017, a Swedish firm called Wheeleys began trialling exactly this technology in China. And it worked a treat…

Once again, the future is upon us and this technology will completely revolutionise the retail and payments sectors, driven by in app card tokens and frictionless payments. Where contactless payments saw an explosion in revenues for the issuers and processors (as a very viable alternative to cash) so this could accentuate that even further on higher ticket values with the customer mindset geared towards walking in, grabbing what you need in seconds and walking out, hassle free. Expect to see a lot more of this in the coming months and years. Exciting times ahead.