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    Will the Convenience Channel Embrace Mobile Wallets?

    The new high-tech payment method is ready to hit the market, but whether c-store retailers and consumers will adopt it remains to be seen.

    By Melissa Kress, Convenience Store News

    As outgoing NACS chairman in 2006, Scott Hartman, president and CEO of Rutter's, told the crowd of more than 22,500 at that year's NACS Show that technology would play an increasingly important role in the convenience store industry, even predicting cell phones would soon replace customers' wallets. Did he get this vision from a crystal ball? Reading tea leaves? No, nothing so mystical. His observations came from a trip to Asia, which has often been the fertile ground were the seeds of technological advances have been sown.

    "Clearly, technology will play an ever-increasing role in our stores and it is already in Asia. The cell phone you have today is nothing like the ones they are using in Japan and Korea, but you will see them here soon," Hartman told fellow industry insiders in his 2006 closing speech. "Cell phones are a customer's electronic wallet. A personal scanner, a personal navigation system and a personal locator, the cell phone will be the payment replacement for the plastic credit card."

    Eight months later, in a presentation to the New England Convenience Store Association, Hartman reiterated his belief in advanced technology in the c-store arena. "Technology will be a key differentiator for customers and employees," he said in June 2007, adding that technology was out in front in Asian countries. He hinted it was only a matter of time before the United States caught up with the rest of the world.

    "The world is a happening place and the U.S. has plenty to learn from international operators," Hartman said then.

    Now, five years later, Hartman's views of the future are coming true. This past spring, Google gave the world a sneak peak at its newest feature, Google Wallet. True to what Hartman saw in Asia, Google Wallet aims to be the next big thing in commerce -- or e-commerce. In unveiling the innovation in May, Google explained that the app will transform a phone into a wallet and is an opportunity to strengthen customer relationships by offering a faster, easier shopping experience.

    "With Citi, MasterCard, First Data and Sprint, we're building an open commerce ecosystem that, for the first time, will make it possible for you to pay with an NFC (near field communication) wallet and redeem consumer promotions all in one tap while shopping offline," Stephanie Tielnius, vice president, commerce and payments at Google, said at the time.

    Google Wallet initially underwent field testing with select retailers (Subway and Walgreens) in New York and San Francisco. The Silicon Valley giant was expected to make the app available to customers this summer.

    Google is not the only provider testing the mobile wallet waters. AT&T Mobility, T-Mobile USA and Verizon Wireless are teaming up on Isis, another version of a mobile wallet. It made news in July when the four major payment networks -- Visa, MasterCard, Discover and American Express -- joined the effort.

    Isis has tapped Austin, Texas and Salt Lake City as its initial test markets. A full rollout is penciled in for the first half of 2012.

    Retailers Keeping Watch

    When mobile wallet platforms roll out to Main Street U.S.A., Hartman said Rutter's will be waiting.

    "Yes, we would be very interested in mobile wallet payments," he said. However, he noted that the rollout could face some technical challenges in the c-store channel.

    "There are a lot of different angles they are coming from in terms of how they will interact with retailers," he explained. "Providers need to get in the mindset of how the payment system can work with different POS (point-of-sale systems). I would love to work with some companies to see if this is achievable."

    Technology-wise, convenience is probably the most complex industry to try to make mobile wallets work, according to Hartman. "For example, in our stores on one end you have grocery, the other fast-feeder and outside you have a gas station. That's three industries in one concept."

    He said mobile wallets may work better in a quick-service restaurant or big-box retailer. However, because they are designed typically for smaller transactions, providers should have convenience stores in their sights "Because of the types of payments they are targeting, our industry should be the No. 1 focus," Hartman said. "Most of our transactions are small transactions and that is what they are looking for. They will not be $5,000 payments, but geared more toward $3, $5 and $10 purchases."

    Despite his faith in the fact that mobile wallets are the way of the future, Hartman said he doesn't think many convenience store operators are readying their POS systems just yet, and may not until the mobile wallet option is a little more refined.

    "It’s not so much a wait-and-see approach, but retailers may be looking for a clearer way to interact with and have the ability to support our POS systems," he added.

    Proving this point, customers at Tedeschi Food Shops may not find Google Wallet when it spreads across the country. "The mobile payments market in the states is immature," said Douglas New, CIO at the New England convenience store operator

    That is not to say Tedeschi is not keeping an eye on the possibility. "We're interested in it, but we're not going to consider investing in the technology until there are at least some standards to review."

    It's a similar story on the West Coast. When asked about the possibility of mobile wallet capabilities at Chevron ExtraMile locations, Colin Parfitt, vice president of Americas West at Chevron, said the company is watching the developments and thinking about how it can be incorporated into pay-at-the pump technologies. However, when it comes to being one of the first retailers on the mobile wallet scene, Chevron ExtraMile will take a pass -- preferring to be a follower on this.

    For more on mobile wallets, including what consumers are saying about them, check out the October 3 issue of Convenience Store News.

    By Melissa Kress, Convenience Store News
    • About Melissa Kress Melissa Kress joined EnsembleIQ's Convenience Store News and Convenience Store News for the Single Store Owner in November 2010. Her primary beats include alcoholic beverages and tobacco. Kress has been a professional journalist since 1995. A graduate of West Virginia University, she began her career in community journalism before moving to business-to-business publishing in 2000, covering commercial real estate.

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