Is Retail Ready for a Cashless Society?

IS RETAIL READY FOR
A CASHLESS SOCIETY?
Evaluating Retail’s
Top 5 Mobile &
Digital Trends
Sponsored by
White Paper
Sponsored by

VendHQ / WHITE PAPER
IS RETAIL READY FOR A CASHLESS SOCIETY?
CONTENTS
Executive Summary.................................3
1. The Omnichannel Imperative...................3
2. Mobile Payment/Mobile POS...................6
3. Digital Wallets...........................................9
4. Digital Currency......................................12
5. Social Commerce...................................14
Conclusion..............................................16
About VendHQ........................................18
About PayPal...........................................18
About Retail TouchPoints......................18
2

It costs U.S. households $43 billion a year to handle cash,
between fees, time, and theft. The tally is even higher for
businesses: $55 billion, accrued through administrative costs,
and most especially, retail theft. Government is on the hook for
$101 billion. Altogether, cash costs the U.S. $200 billion a year,
according to September 2013, research by Tufts University, The
Cost of Cash in the United States.
Online shopping and mobile technology are driving the retail industry toward a
potentially cashless business model. A report by Javelin Strategy & Research found
that in 2011, just 27% of all point-of-sale purchases were made with cash, and that is
expected to drop to 23% by 2017. Just 40% of consumers currently carry $20 or less
in cash, according to the 2014 Future of Retail Study, from Walker Sands, and 40%
shop online at least once per month.
What does this mean for the future of retail? Is the retail industry ready for a
cashless reality?
To be sure, cash has its value — and its fans. But significant trends underway in
retail are largely incompatible with cash transactions, together suggesting that in our
increasingly digital, mobile world, cash may be on its way out. This white paper
outlines the 5 key trends moving today’s retail industry and includes a call-to-action
for each:
1. The Omnichannel Imperative
2. Mobile Payment/Mobile POS
3. Digital Wallets
4. Digital Currency
5. Social Commerce
Cash costs
the U.S. $200
billion a year.
— Tufts University
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3

1. THE OMNICHANNEL
IMPERATIVE
Shoppers want a consistent brand experience from the couch to
the checkout. In response, retailers are working to sync
information across all channels to provide personalized offers
and flexible order/deliver options. That means the call center, the retail
store as well as online and mobile apps are seeing and working off the same
centralized data and applications to get a 360-degree view of the customer.
According to Corporate Attitudes and Adoption Trends of Multi-Channel and
Omni-Channel Marketing, by Platt Retail Institute, “Firms that fail to adopt
an omnichannel marketing (OCM) strategy risk losing their customer relationships.
However, viewing this as a
strategic opportunity can
lead to competitive
advantage for skilled
marketers by ensuring that
all consumer touch points
have seamless
interoperability to deliver a
consistent brand and
shopping experience.”
41% of
consumers said
quick and
easy payments
influenced their
purchases when
shopping online
and mobile.
— Accenture
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Meeting consumers’ needs seamlessly
across channels is key. Look for solutions
that provide:
•• The ability to easily transition from online
to mobile to the retail POS;
•• A full array of payment choices, including
credit, debit, gift card, check scanning,
and PayPal’s fast processing speed; and
•• A 360-degree view of customer data
across all channels, easily accessible to
all employees, from HQ to store
managers.
4

A significant part of this effort is creating frictionless
payment. Retailers want customers focused on the
thrill of the purchase, not the mechanics of the
payment process.
For many, that means moving to omnichannel
payment: Making the experience identical across
channels. To attain this, retailers need POS systems
that offer the same customer interface and options and
the same steps to pay no matter the channel.
Research by Accenture found 41% of consumers said
quick and easy payments influenced their purchases
when shopping online and mobile.
PayPal is leading the pack when it comes to helping
retailers accommodate the changes in how consumers
shop. Today, consumers can access their PayPal
accounts online, via mobile technology and use their
PayPal account to pay at the POS in the retail store.
Businesses can accept a PayPal mobile payment or
swipe a U.S. credit card or
debit card for a 2.7% transaction fee. PayPal also
supports merchants’ different needs from multi-location
solutions to inventory management — and is
collaborating with top POS providers to bring innovative
payment solutions to businesses.
5

2. MOBILE PAYMENT/
MOBILE POS
A significant step in making payment frictionless is to bring it to
the customer, rather than forcing the customer to the payment
device. This can involve equipping associates with mobile
devices as well as enabling customers’ own mobile devices to
transact a payment. IHL Group estimates that approximately 45%
of retailers are adopting mobile devices in stores.
There is a widespread sense among retailers that mobile payment is essential to the
seismic changes underway in retailing. In Boston Retail Partners’ 2013 Retail
Technology Study, 45% of retailers called providing customers with mobile and
checkout important or very
important. A separate study
by Walker Sands found that
59% of consumers would be
more likely to shop at a store
offering the ability to self-
checkout on a mobile device.
Mobile payment is quickly
emerging as a must to satisfy
increasingly demanding
consumers accustomed to
the ease of doing business
online and expecting an
equal experience in stores.
It’s also a great option for
retailers looking to rapidly
deploy pop-up stores.
“Cash management is always an issue, particularly at
theme parks, where you have to store it, get it to the bank
and deal with loss prevention,” said Steve Taitoko, COO of
Magic Memories, a souvenir photo concession operator.
“The sooner we can move to cashless the better.”
Approximately
45% of retailers
are adopting
mobile devices
in stores.
— IHL Group
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6

RSR Research’s The Impact of Mobile in Retail:
Benchmark Report, December 2012, put it this way: “Now
is the time to be experimenting, even if only in small-
format pilot programs to unearth new ways to delight the
mobile consumer.”
A number of solutions have emerged to execute mobile
payment, such as using barcode scanning, near field
communications, and cloud. PayPal, for example,
leverages the cloud, and is collaborating with a number of
leading POS providers to integrate its mobile solution.
PayPal also has unveiled its own consumer mobile app
designed to make transactions simpler and a lot more fun
for consumers, like receiving special retail promotions,
paying by photo check in via the mobile app, order ahead,
and ordering and paying right at the table. The
combination of a mobile platform and a flexible payment
partner, such as PayPal, enables retailers to get POS
solutions that are tailored specifically to their needs.
Convenient, mobile payment is critical for Magic
Memories, which operates a souvenir photo concession
at more than 100 global attractions. Associates have
approximately 90 seconds to present photos to guests
and complete the sale. A tablet solution that offers a fast,
integrated payment solution is a must, said Steve Taitoko,
COO of the New Zealand-based retailer, which chose
POS software from Vend to meet these requirements
While Magic Memories will accept it, “Cash management
is always an issue, particularly at theme parks, where
you have to store it, get it to the bank and deal with loss
prevention. The sooner we can move to cashless
the better.”
When selecting a mobile payment solution,
look for:
•• Tight integration between the POS and
payment processing software; it’s
important that both are part of a full
payment ecosystem;
•• Fast processing speed;
•• Solutions that protect retailers by
complying with PCI;
•• Solutions built on knowledge of payment
requirements in all countries where you
will sell;
•• Robust wireless connectivity;
•• A solution partner offering a wide array of
mobile options that can be tailored to
specific business needs; Click here to
access a free trial of Vend.
•• A payment brand partner — such as
PayPal — that your customers already
trust.
7

A mobile device is a great tool, but it takes a full solution including software,
payment and the right vendor to really make it work for a business. That’s the
lesson Boating in Boston learned over the past six years as it tried different
POS systems at its 12 locations. The company operates boating concessions in
public parks, far from any wired connection, so wireless connectivity and an
easy-to-learn interface are key. To help the company’s part-time seasonal
workforce succeed during the May to October season, Boating in Boston sought a
vendor that could tailor the software to its needs. “We like Vend’s cloud model and
their application, and they’re extremely responsive,” said Michael Aghajanian,
Owner. Vend acted quickly to modify the application to meet
the boat rental service’s unique needs, such as the requirement for “as many as
100 ‘parked’ transactions, and customized reports,” he said. “They’re very
customer service-oriented.”
8

3. DIGITAL WALLETS
The promise of mobile wallets goes well beyond payment: In
addition to credit cards, wallets aim to place loyalty cards, gift
cards, debit cards, checks and coupons in a digital wallet — so
consumers can access their information online, at the POS or
on a mobile phone.
A comprehensive digital wallet solution enables demand generation such as loyalty
and offers; account management such as shopper preferences and purchase
history; mobile POS to pay in stores; e-Commerce for web payments; and payment
for mobile web purchases. Many large companies are vying for the largest piece of
the mobile wallet pie, including PayPal, Google,
MCX and ISIS. In one study, comScore found that
one in two consumers say they are likely to use a
digital wallet within the coming year, provided the
ability to do so.
Each wallet vendor offers a unique approach to
technology, infrastructure and security, and many
experts have weighed in on which vendors will
attain critical mass.
Analysts including Forrester note that a critical
factor in the success of a wallet solution is the
trust that consumers place in that brand. For
example, PayPal offers shoppers the ability to
pay through their phones, receive store offers/
coupons and transfer funds to their bank account
or send money to family/friends.
One in two
consumers say
they are likely to
use a digital
wallet within the
coming year,
provided the
ability to do so.
— comScore
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9

The comScore report also noted that trust is a leading
influencer of intent, second in importance only to
privacy. Consumers are more than twice as likely to
trust already familiar digital wallet brands. When it
comes to digital wallet features, consumers value ease
of use and usability over innovation.
Both Forrester and comScore found a high level of trust
in PayPal: Forrester’s Consumer Technographics data
showed that U.S. online adults trust PayPal more than
any other financial institution to act as a mobile wallet
platform — even more than a bank. Almost three
quarters of Americans equate digital wallets with
PayPal, and almost half have used the PayPal digital
wallet, according to comScore. Usage drops from 48%
to just 8% for the next most-popular wallet.
PayPal recently announced PayPal Beacon, a new
technology that will make paying completely hands
free: shoppers won’t need to pull out a wallet or
mobile device, swipe a card, or even open up an
app. The solution uses Bluetooth Low Energy (or BLE)
technology to connect mobile devices seamlessly.
One it hits stores, consumers will be able to choose to
check in at a store (or at their favorite stores that use
Beacon), his or her photo will appear on the POS
system; all it takes to pay is a verbal confirmation.
Customers who choose not to check in are not
tracked, so privacy is maintained.
To ensure the ability to accommodate
wallet solutions:
•• Compare packages and look for maximum
value. Over the next 12 to 24 months
wallet vendors will be making a full-court
press to acquire merchants. PayPal, for
example, recently offered more than
six months of free processing to
qualifying merchants through its Cash
For Registers program.
•• Work with vendors who show interest in
collaborating with you to offer features
you value, such as loyalty, coupons,
offers and funding mechanisms, as well
as programs that bring you customers.
•• Make payments simpler by offering
consumers options such as order ahead,
pay at table, or simply checking in to
pay, to encourage the adoption of
mobile payments.
10

As more customers adopt wallet technology, retailers like Top Shelf Style, a clothing
store-on-a-truck that frequently parks in San Francisco’s financial district, are
becoming major beneficiaries. Female financial executives often dash out of the
office with their phones and just enough cash to grab lunch, said Christina Ruiz,
Owner of Top Shelf Style. “We get a lot of people who say ‘I left my card in the
office’. They might come back, or they might not. If I can offer one other way to make
a payment, that increases my probability of making a sale on the spot.” Making the
transaction fast for the customer makes a sale even more likely, she added.
“We get a lot of people who say ‘I left my card in the office’. They might come back, or they
might not,” said Christina Ruiz, Owner of Top Shelf Style. “If I can offer one other way to
make a payment, that increases my probability of making a sale on the spot.”
11

4. DIGITAL CURRENCY
As traditional forms of payment grow increasingly digital, digital-
only currencies are growing in profile. Typically alternative digital
currencies are not produced by governments or backed by a
national currency. The more well-known digital currencies
include Ven, Ripple, Coinbase and Bitcoin.
Of these, Bitcoin has the most traction to date. According to Jeff Neuburger, co-
head of New York-based Proskauer Technology, Media & Communications Group,
bitcoins exist purely as code, created through a mathematical process called mining
and processed through exchanges, moving from one Bitcoin user’s wallet to
another’s. They exist as both a real-world currency and an object of speculative
investment, so Bitcoin’s value can fluctuate widely. There are more than 11 billion
bitcoins in circulation, and there will never be more than 21
billion. In mid-November each one was worth $392,
rising to a high of more than $1,100 in December.
Yet, the value of bitcoins dropped after China
questioned its legal status. All in all, it is not a very
stable currency at this stage.
But due to a lack of regulation around digital
currency, while Bitcoins allows the ability to
conduct anonymous, public transactions,
they also could be used for illegal
activities. During recent U.S. Senate
committee hearings on Bitcoin and
digital currencies, regulators, officials,
and academics offered cautious but
Retailers should
select flexible
POS and
payment
software that
includes a
provision for
current
acceptance of
digital currency,
or a roadmap
that includes
acceptance.
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12

positive views on their potential role within the greater
economy, according to Neuburger. Meanwhile, the
currency has been making inroads with mostly smaller
retailers and eTailers including Foodler and Etsy. Benefits
to retailers, he said include:
• Attracts a tech-forward clientele;
• Creates a “buzz”;
• Natural connection to certain industries;
• Option for investment if the company holds the
Bitcoins instead of immediately exchanging them
for USD;
• Encourages spontaneous transactions;
• Flexibility for consumers: PC, mobile, web site; mobile
to mobile; and
• Lower transactional costs.
But there are risks as well, including the lack of
governmental backing and regulatory uncertainty;
performance, reliability and security issues with the
processing network; volatility and liquidity issues; and
digital currencies’ mixed reputation. While experts point to
some momentum, the future is far from certain.
To prepare your POS system for digital
currency, consider the following:
•• Select flexible POS and payment software
that includes a provision for current
acceptance of digital currency, or a
roadmap that includes acceptance.
•• Investigate leading digital currency
providers and their geographic market
presence and consider installing a
shopping cart plug-in for the provider(s)
of choice.
•• Choose trusted options that consumers
will feel comfortable using without fear of
theft or fraudulent use. Solutions such
as PayPal continue to provide that type
of trust.
13

5. SOCIAL COMMERCE
The path to purchase is becoming increasingly complex. Beyond
online research, pre-purchase activity often now includes social
media — Facebook, Twitter, Pinterest and YouTube. The Walker
Sands study found nearly six in 10 consumers report interacting
with brands on social media, and three in 10 were frequent online
shoppers — purchasing online more than twice per week —
using Pinterest to discover new products.
Retailers are recognizing this trend and setting up processes to engage with
consumers and influencers. But these are still early days. Many are experiencing a
social relationship management execution gap in which they view a number of
activities as valuable, but haven’t gained proficiency with their execution. But
according to Aberdeen Group’s Social Powers Activate: Engineering Social
Engagement to Win the Hidden Sales Cycle, September 2013, retail leaders are
reaping more value from their current social media activities, compared to retail
followers. For example, they are more likely to drive social contacts to their web site
or convert a marketing response into a qualified marketing lead.
Magic Memories sees social media as key to expanding the company’s relationship
with theme park guests. Already, guests can share purchased photos, but in the
future, social media will allow Magic Memories to drive additional post- and even
pre-visit purchases. “If we can get to guests before they visit, they are already
engaged, and we hope we can significantly impact conversions,” said Taitoko. “It will
make the sale more than an impulse.”
70% of leaders,
compared to 35%
of followers, see
social media as
a vehicle to
improve their
firm’s brand
image.
— Aberdeen
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14

What is left to determine is whether social media will
remain an enabler, generally building sentiment and
driving customers to existing channels, or whether they
will evolve into transaction channels as well. Currently,
Aberdeen found that:
✓✓ 70% of leaders, compared to 35% of followers, see
social media as a vehicle to improve their firm’s brand
image; and
✓✓ 55% of leaders, compared with 52% of followers, plan
to expand demand (lead generation/customer
acquisition) using social media.
“The connected nature of today’s buyer’s journey pushes
firms to incorporate social touch points within CRM and
customer experience management (CEM) initiatives,
and to foster social communities among existing
customers, stakeholders, and advocates,” according to
the Aberdeen report. Clearly, right now leaders see
social media as a way to drive positive sentiment and
conversions, but not as a vehicle for direct selling, and
therefore, an area where they need to develop a
payment mechanism.
When you think about your business and
social media transactions:
•• Start with current and future objectives
for your social media activity and
consider whether transactions
are appropriate;
•• Look at options to seamlessly move
interaction to payment: Top Shelf Style
uses social media to share the latest
arrivals with fans, then seamlessly
transitions to PayPal Here for
sales; and
•• Ensure your POS and payment software
providers offer the flexibility and APIs
needed to integrate with social
media sites.
15

CONCLUSION: PLAN
AHEAD FOR PAYMENT’S
DYNAMIC FUTURE
Retail is undergoing a profound paradigm shift in the way
retailers and consumers interact, and so is payment. A
customer-centric, omnichannel retail experience requires a
consistent payment experience. It also means:
1. Offering solutions that deliver real value to consumers. To have long-term
value, new payment options must help shoppers save time and money;
2. Bringing the transaction to the customer through mobile payment, where
appropriate.
3. Engaging with the leading wallet solution to be ready for the imminent
disruption in how retailers store and exchange payment and loyalty data.
4. Keeping an eye on rapidly evolving digital currencies.
5. Monitoring evolving best practices in social media and in particular, its link
to commerce.
So is your business ready for a cashless society?
“All of these trends represent the drive to make payment a convenient, frictionless,
part of transactions, and the move away from cumbersome processes such as
handling cash,” said Vaughan Roswell, Founder and CEO of Vend. “Savvy retailers
that stay on top of these developments and act quickly as trends emerge not only
16

gain first-mover advantage, but cast a positive, cutting-edge vibe over their entire
business. Being that nimble requires flexible solutions that can adapt to whatever
forms of payment catch on.”
Entrust your business to POS and payment vendors that offer a flexible, innovative
platform that accommodates all of these possibilities, combined with a business
model based on tailoring the broad array of POS and payment options into a
package customized to your unique business needs. Click here to discover why
leading retailers are using the Vend PayPal mobile POS solution.
“Savvy retailers
that stay on
top of these
developments
and act quickly
as trends emerge
not only gain
first-mover
advantage, but
cast a positive,
cutting-edge
vibe over their
entire business.”
— Vaughan Roswell,
VendHQ
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17

About Vend
Vend is a cloudbased retail software platform, which enables retailers to accept payments,
manage their inventories, reward customer loyalty, and garner insights into their business
in realtime. It’s simple to set up, works with a wide range of pointofsale devices, and operates
on any web capable device with a browser. Vend also seamlessly integrates with other fantastic
business apps such as Xero, Timely and Magento. Launched in late 2010, Vend now has more
than 8,000 active users in over 100 countries and is seeing continued rapid global growth right
throughout 2013.
About PayPal
PayPal is the faster, safer way to pay and get paid online, via a mobile device and in store. The
service gives people simpler ways to send money without sharing financial information, and with
the flexibility to pay using their account balances, bank accounts, credit cards or promotional
financing. With 137 million active accounts in 193 markets and 26 currencies around the world,
PayPal enables global commerce, processing almost 8 million payments every day. Because
PayPal helps people transact anytime, anywhere and in any way, the company is a driving force
behind the growth of mobile commerce and expects to process $20 billion in mobile payments
in 2013. PayPal is an eBay (Nasdaq:EBAY) company and contributed 40 percent of eBay Inc.’s
revenues in 2012. PayPal is headquartered in San Jose, Calif. and its international headquarters
is located in Singapore. More information about the company can be found at www.paypal-
media.com.
About Retail TouchPoints
Retail TouchPoints is an online publishing network for retail executives, with content focused on
optimizing the customer experience across all channels. The Retail TouchPoints network is
comprised of a weekly newsletter, special reports, web seminars, exclusive benchmark
research, and a content-rich web site featuring daily news updates and multi-media interviews
at www.retailtouchpoints.com. The Retail TouchPoints team also interacts with social media
communities via Facebook, Twitter and LinkedIn.
411 State Route 17 South
Suite 410
Hasbrouck Heights, NJ 07604
P: 201.257.8528
F: 201.426.0181
info@retailtouchpoints.com
185 Clara Street, Suite 100
San Francisco, CA 94107
USA
P: 1-888.598.6163
2211 North First Street
San Jose, California 95131
www.paypal.com

Is Retail Ready for a Cashless Society?

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