How UK retailers are advancing with online payment innovations

image of samsung phone being held near a contactless-enabled POS terminal showing the new Samsung Pay mobile payment service

Consumers are fickle human beings and this can make them unpredictable. One day they are buying into latest craze, queuing for hours to buy a t-shirt from Kayne West’s Pablo pop-up store; the next, they are pre-ordering the latest and greatest gadget online in the comfort of their homes. For retailers, the challenge is how to capture their consumers’ attention across a fragmented market where people are increasingly shopping online to buy everything – all at the click of a button.

With the online retail market estimated at $2.8 trillion, high street chains are under constant pressure from e-commerce giants Amazon and eBay, while consumers expect retailers to provide a seamless shopping experience – whether they buy in-store, via the web or using their mobile.

Furthermore, the internet market is a tough environment to survive in. A survey by Adroll suggests that only 2% of first-time visitors to websites convert into sales, while 68% of carts are abandoned according to Baymard research. While e-commerce companies are working hard to improve these numbers, for store retailers, trying to stay afloat in the online market is an even greater challenge.

Despite this, as a whole, the major UK and US retailers are embracing this digital transformation much quicker than you would think and tackling the digital challenges they face in different ways. Some are directly going head-to-head with Amazon and eBay to launch competing products, others are embracing online data to unify their payments infrastructure and others are launching tech accelerators to incubate new ideas and start-ups.

In order to make these strategies effective, companies will need to monitor new developments across the sector and keep up-to-date with what their main competitors and disruptive start-ups are doing. To make things harder, the internet today is flooded daily with new business ventures and teams will have to use the best tools at their disposal to ensure that only the most important insights are passed to their executives so that they can make the right decisions on the digital future of their firms.


Next-generation payment innovations

Store retail beasts such as Tesco, Sainsbury’s, Argos, John Lewis are in a race to develop new technologies and launch digital initiatives, featured below, to deliver above and beyond their customer’s expectations.



Tesco, one of the UK’s largest retailers, is launching same day click-and-collect for its customers. They will be able to shop from their smartphone, laptop or computer and collect within three hours. This follows in the footsteps of Amazon who has just started selling groceries online with same day delivery. It’s a move that reflects the trend of online shopping, with consumers not only buying more online but expecting their goods delivered within the hour.



This month Sainsbury’s appointed News UK’s Andrew Day as its first chief data officer at the company. With a focus on customer insights and unifying the data across the business, Sainsbury’s is driving digital transformation for its customers. For example, the company recently launched the new pay-at-pump POS system for its petrol stations, providing a seamless experience from offline to online payments.



Argos has always been a pioneer in the retail experience for consumers, however with the digital revolution, the retailer has increasingly become innovative with how it serves its customers. In fact, 60% of Argos sales are now online and the company was the first British retailer to make more than £1bn through mobile payments.


John Lewis

John Lewis’ retail accelerator, J Lab is it’s third successful year incubating digital and tech start-ups for its programme. Recently the UK retailer announced a partnership with TrueStart to find and fund the products, services and technologies that will shape the future of the high street.


The new payment disruptors

Although major retailers are embracing digital innovations within online payments, there are new threats to the market with disruptors such as Square, iZettle and Barclay’s PingIt changing the game.



Virtual currency may not be mainstream just yet, but companies such as BitInstant, plan to introduce Bitcoin prepaid cards to help consumers spend the virtual currency at any merchant who accepts MasterCard.



Boku is a new entrant to the payments market, where users can pay with their mobile without the need for a Visa, MasterCard or PayPal account. Users use their mobile number to authorize their payment. For merchants they only need to integrate once and begin accepting payments from any mobile in the world.



LevelUp is a mobile app that lets users choose from their favourite places, and order or re-order via the app. Once ordered, they can skip the line and go in-store straight to collect.



Green Dot is a prepaid debit cards, which makes it easy for consumers to shop online, pay bills and make everyday purchases. There is no upfront fee or credit check to order a card online, and no minimum balance required.


Mobile Wallet Technologies

What about physical cards themselves? Has the reign of plastic come to an end? Not quite, but it’s certainly the case that more and more millennials are looking to use mobile wallets for their payment needs. The introduction of Apple Pay, back in 2014, was a revolution in NFC payments but now it seems that Android payments have taken the lead with 67%, versus 56% of iOS users, using their mobile wallet more than once a week. Regardless, this is a strong sign for the future of the mobile wallet.



Apple’s payment service Apple Pay can now authorise online purchases on Mac computers, at the touch of a finger. It is thought that over 200,000 websites could support the feature in the coming weeks, and BigCommerce, the ecommerce giant, has also announced its support. Using Apple Pay online will remove the need to type in card details when purchasing, which is often clunky and puts off customers from buying. Recent research also suggested that online payments via the likes of Apple Pay and Android Pay will hit $8 billion by 2018.


Yo-yo wallet

Yo-yo is mobile wallet app that allows users to pay using QR codes. The codes are unique to each transaction and retailers don’t need to stock any extra equipment than a 2D infra-red scanner – something 50% of UK businesses have anyway.

Furthermore, the Yoyo app allows retailers to analyse their consumers’ spending data, enabling them to produce targeted marketing to their most valued customers. Buyers don’t need to keep track of all their loyalty cards either as they can all be stored in the app. Yoyo’s owners report that the app covers the second largest amount of transactions for mobile wallet purchases, just behind Starbucks and the British firm has recently made steps to break into the US market.

As disruptive companies continue to break up the online payments sector and take a slice of the pie, there will likely be new threats to the existing retailer and giants as well as strategic alliances that aim to make the online experience of their consumers as smooth as possible. Those that thrive in this environment will be those that truly embrace digital transformation and monitor the shifting landscape effectively.


About the Author

Nick Gregg is the CEO of EditorEye. Catalyst tracks innovation by major player and new entrants in the payments market, providing intelligence and briefings to financial companies.

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