Uber’s ‘Pay with Venmo’ signals the slow death of traditional POS
On the heels of the industry’s transition to chip card technology in the U.S. and intense competition from upstarts like Square, Poynt and Clover, point of sale card readers have struggled to remain relevant.
And as further evidence of the impending “card-less takeover,” Uber recently introduced a “Pay with Venmo” option as part of an ongoing partnership with PayPal. If you haven’t seen the news, the feature will allow Uber riders to pay for a trip with the money sitting in their Venmo accounts.
So why are we now seeing these shifts in the industry?
It all comes down to convenience. New payment apps like Venmo and widely adopted mobile wallets such as Apple Pay and Alipay have made the consumer payment experience incredibly convenient. Consumers no longer have to memorize their card information or type in 15 numbers for every purchase. They’ll input this information one time, creating a username and password, and are only required to remember this information for future purchases.
In fact, depending on their smartphone’s security settings, they may not even have to do this to make a purchase. Most mobile wallets are integrated with a smartphone’s security features, so consumers can bypass the login process with the touch of a finger or using their phone’s facial recognition capabilities.
Mobile wallets also continue to close the gap between e-commerce and retail. Shoppers can pay with a mobile wallet like Visa Checkout, MasterPass or Apple Pay in store, in-app and on e-commerce websites. Retailers who accept mobile wallets at the point of sale are offering their customers the most streamlined checkout experiences available, but education of the available technology will be vital for widespread adoption by consumers and retailers alike.
Beyond this, order-ahead technology, which allows customers to by-pass the traditional checkout, is contributing to the death of POS. In the fast-paced digital world, customers don’t want to wait in line and retailers are designing their stores with this preference in mind. Starbucks is the obvious champion of this initiative. Its mobile app allows users to walk in and, without waiting in line, ask a barista for their freshly made order at the pickup area. This is the type of experience consumers demand and retailers would be smart to take notice.
Starbucks isn’t the only retailer thinking about “frictionless” in-store experiences. Amazon is taking the idea a step further. Through its Amazon Go store format, it is challenging the notion of brick-and-mortar as we know it.
You’ve likely seen the now-viral advertisement. Amazon Go starts with a smartphone app. When entering an Amazon store, shoppers scan the app which will then serve as their virtual shopping cart. Once shoppers have everything they need and are ready to leave the store, they can just walk out the door. No checkout lines — period. How’s that for frictionless shopping?
The store’s success and recent momentum is a great example of how POS, loyalty and payments are converging. The need for a credit card, paper receipt, loyalty cards, etc., is quickly disappearing and this results in a convenient shopping experience.
Looking back, Venmo was purely designed for peer-to-peer money transfers. However, its recent partnership with Uber represents how fintech companies are evolving based on trends in the market. New payment apps, widely adopted mobile wallets, mobile order-ahead technology and Amazon Go all demonstrate a clear shift in the industry. To be successful, fintech companies will need to offer merchants the best consumer experiences available.