Payments:
Mobile sales remain a challenge D7
Tony Rojas was on a mission.
His task: to persuade shoppers at Rainbow Grocery store to download an app called Selfycart that could shave minutes off standing in line. Instead of going to the checkout counter, shoppers would scan their own items and pay with a credit card on their iPhones.
For customers looking to buy items in a hurry, “ours is a great alternative,” said 21-yearold Rojas, wearing a bright red Selfycart T-shirt.
His app is one of many vying to get shoppers to pay using their smartphones. The pitch to consumers is that it’s an easy way of paying for items without taking out a credit card or fumbling with cash. The attraction for retailers is that mobile payments could offer more precise data on shoppers and what they’re buying.
More consumers are choosing to pay for items using their smartphones through mobile payments like Apple Pay and Android Pay, according to consulting firm First Annapolis. Those methods allow users to pay for items by simply holding their phones next to a reader on the checkout counter. A June survey showed that 74 percent of U.S. consumers made at least one mobile payment in the past 12 months, up from 40 percent in May 2015, said First Annapolis.
“The trajectory of mobile suggests that how we pay is going to change dramatically over the next five years,” said Lee Manfred, a partner at the firm. As more people start to use mobile payments as they shop, more retailers are willing to make such payment options available at their stores, he added.
Jack Richards, an owner of beauty, bath and home products store Nancy Boy in Hayes Valley, said it’s important for his business to accept different types of payments. He uses a portable terminal made by San Francisco tech firm Square, which accepts credit and debit cards with chips, and mobile payments like Apple Pay.
“I want to make it convenient as possible for people,” Richards said. “I certainly don’t want to put up any impediments for how they want to pay for my products.”
Joe Guith, president of Cinnabon, said replacing cash registers with iPads makes Millennial customers and workers feel more comfortable at his chain. As part of an extensive renovation of its mall stores, Cinnabon, known for its freshly made cinnamon rolls, is switching to machines that accept Apple Pay.
“Millennials are visual learners. They are not used to staring at binders; they are used to staring at iPads,” Guith said at a conference held by Revel Systems, a San Francisco firm that provides software that manages the sales and inventory of retailers.
As more retailers accept mobile payments, the options are growing. As of December, there were more than 2,000 payment-related startups, according to a report by research firm Forrester. But only a few apps will emerge victorious. So far, the three mobile payments with the most customer awareness are: PayPal (88 percent); Apple Pay (74 percent) and Amazon (61 percent), according to First Annapolis.
Jesse Dorogusker, Square’s head of hardware, said he believes that mobile payments are the future.
“It’s not a behavior that people have figured out yet, but those that do love it, and they are going to stick with it,” Dorogusker said.
Sahle Hashelit, co-founder of Selfycart, hopes his San Mateo startup will offer customers an alternative to waiting in line or fumbling through the self-checkout counters at grocery stores. It works like this: Customers download a free app and then use the phone’s camera to scan bar codes of items they want to buy. Once all the items are scanned, customers pay by credit card or other options like PayPal through the app and get a QR code. The customers present the QR code to a grocery staffer and leave without going through the checkout line.
Hashelit, a former manager at PayPal, came up with the idea last year when he was waiting in line to buy a milk jug and eggs at Safeway. After seven or eight minutes of waiting in line, he decided to use the self-checkout machine, only to encounter a technical issue that required a cashier’s assistance. The process is “so broken,” Hashelit said.
So he spent his free time interviewing customers and merchants on how to make the process better. “By talking to these people who would be my customers ultimately, I knew there was something there,” said Hashelit, who left PayPal in June 2015 to pursue Selfycart full time.
But convincing shoppers at Rainbow Grocery, where many pay using a credit card, can be a challenge. Plus, at Rainbow, customers pay a 2 percent fee on top of their purchase for the convenience.
David Skolnick, 47, was one of the first customers to try out the app at Rainbow last month, only to find that some of the items he wanted to scan into the app, like pierogies and energy bars, didn’t work. Selfycart’s Rojas said this doesn’t usually happen.
“So far, not such a good average,” Skolnick said. After his experience, Skolnick, an adjunct professor at the California College of the Arts, was uncertain whether he would use the app again. “If they can work out the kinks, maybe,” he said.
But Hashelit and his cofounder, Erick Lee, have big plans for the app.
“We want to eliminate the line everywhere,” Lee said.
Besides Rainbow, the app is available in Bianchini’s Market in Portola Valley and Bfresh in Brighton, Mass. (At Bfresh, customers do not an extra 2 percent for using Selfycart on top of their purchase because the retailer takes care of the fee, Lee said.)
Selfycart got its app into Rainbow after Hashelit walked into the store and made a pitch.
Rainbow’s Paul Knowles said the conversation about Selfycart sparked his curiosity. “We’re willing to entertain things like that,” said Knowles, who helps oversee technology at Rainbow. “We decided to give it a shot.”