Convenience stores are transforming to accept new payment methods

Convenience stores are transforming to accept new payment methods

Mark Beresford
July 3, 2018

The role of convenience stores has not drastically changed over the last few decades.  They stock a range of everyday items such as groceries, snack foods, confectionery, soft drinks, tobacco products, over-the-counter drugs, toiletries, newspapers, and magazines.  In some jurisdictions, corner stores are licensed to sell alcohol, typically beer and wine.  Some stores may offer money order and wire transfer services, along with the use of a fax machine and photocopier. A convenience store may be part of a petrol station.  The location of a convenience store (or sometimes known as a c-store, bodega, mini-market, mini-mart, konbini or simply the corner shop) could be on a busy road with dedicated car parking, in a city, in a train station, or at another transport hub.  They can be seen everywhere in our cities and towns and that’s why they are convenient, drawing in a regular footfall of consumers passing by.

However, in terms of payment acceptance, convenience stores are currently undergoing a massive change, in three specific areas:

  1. The point of sale interaction that the consumer experiences within the store
  2. The fragmentation of payment methods – there is a proliferation of the types of payment methods and the different ways to pay for goods and services
  3. C-stores are embracing the omnichannel consumer by offering a multichannel experience through services such as ‘click & collect’ and home delivery.

The changes in c-stores that we expect to see over the next 10 years will be more than the cumulative impact of the changes that we have seen in the last 50 years. For example, c-stores will be a focal point for consumers as a result of greater urbanisation, the increase in the number of smaller families, less car ownership and an aging population.  C-stores will not only provide a place for your groceries, but a wider range of financial services will be available, such as bill payment, disbursement of pensions, currency exchange. In the future, c-stores are anticipated to be ideal distribution hubs for e-commerce drone delivery and a location to pick-up/drop-off shared transportation solutions, such as electric vehicles.

The rise of non-card payments online is exactly what we expect to see in-store for face to face transactions. C-stores are the one area of retail where the POS infrastructure has a relatively low-cost and can be quickly and inexpensively changed to adopt new technologies, such as Bluetooth Low Energy, contactless payments and read and generate QR codes.  If you look at the far eastern markets, such as Japan and China, new non-card payment methods, such as WeChat and Alipay, that have been designed to be mobile-first and fully digital are being adopted. The rise of these new forms of payment has coincided with the increased emphasis that c-stores are placing on the redesign of the customer experience at the point of interaction between the shopper and the retailer.  Creating new and exciting shopping experiences taking advantage of digital technologies will inform and support the shopper’s path to purchase.  Digital customer messaging and digital engagement through immersive technologies, such as augmented reality, is changing the retail landscape and how shoppers transact at the point of interaction.  Simplified pricing, easy check-out flows, ‘one-touch’ payments and preferred payment options all play their part in the overall customer experience.

Walk-in Vending Machines

Self-service checkout is not new for c-stores.  However, Co-op (UK), Albert Heijn Tap to Go (Netherlands), BingoBox (China), Emart24 (Korea), 7-Eleven Signature (Korea), Auchan Minutes (China) and with the much publicised, Amazon-Go (USA), are all examples of new forms of convenience stores using innovative self-service technologies.  These examples of c-stores are starting with a blank sheet of paper when it comes to how the consumer pays.  Adopting a mobile-first approach, using a mobile wallet, they are designing new and distinctive ways of shopping.  Payment and identity have become an integral part of the customer experience.  C-stores are using technologies such as Artificial Intelligence, machine learning, biometrics, face-recognition, unmanned checkout systems, 360-degree laser scanners, QR codes and barcodes, smart CCTV systems, automated refrigerators with sensors that open their doors when a customer is nearby.  The application of existing and new technologies appears to be never-ending.  Even biometrics, such as vein-scanning technology, has been adopted for smart tobacco-vending machines, which can identify and prohibit minors from buying cigarettes. These technologies combined with good customer experience design will create new cashless customer engagement models.

Technology and retail companies are experimenting with unmanned store concepts in China, as part of a fusion of online commerce with physical shopping. BingoBox is probably the largest with over 200 stores in mainland China and they have plans to launch in Hong Kong and beyond China.  7-Eleven opened its first unmanned store in Seoul, South Korea first quarter 2017, called Signature. 7-Eleven Signature claims to be the first unmanned c-store; no cash, no payment cards, just a biometric hand/fingerprint for the checkout.


C-stores are promoting frictionless payment experience and enabling quick check-out – important for those consumers on the go and with no time to queue.  The growth of contactless technology (contactless cards and NFC mobile payments) has only made it easier for consumers to spend on their cards, particularly for small value payments where cash used to dominate.  In 2017 in the UK, the average transaction value (ATV) for all debit card purchases reached the lowest level at £38.20 – attributed to the growth of contactless payments.  Six years ago, the ATV was over £50 for a debit card.  The Co-op, in the UK, has developed a ‘pay-in-the-aisle’ concept.  Here the consumer uses their smartphone App to scan and pay for items selected straight from the shelf.  Effectively, this places the entire store’s inventory into the cloud, along with the product pricing, product promotions and point of sale check-out.  Consequently, this entirely removes the need for the whole POS technology infrastructure, i.e. hardware and software, that the store traditionally has on-site.  No need for check-out queues, weighing machines, conveyor belts or the customer bagging area.  Tesco recently announced a similar concept.

The payments ecosystem that we see today has already changed in the last 5 years and to imagine it as being made up of chiefly banks, issuers, acquirers and processors would be too simple. The payments ecosystem has already changed and will continue to rapidly change beyond recognition.  This is helping c-stores and other retailers to re-think payments and make it integral to the re-deign of the customer experience.  There are more players serving different elements of the payments ecosystem.  However, it will continue to evolve at a different pace in different markets.  Some developing and emerging markets such as parts of Africa and China, will overtake the developed/mature markets in terms of payment innovation.  Europe will still endeavour to harmonise payments, with instant and real-time payments, where the expectations are high amongst retailers.  New processors, payment intermediaries and payment service providers will enter the market.  The c-stores have been agile to adopt new payment methods and new ways to shop.  This has been noticeable in the Asian markets, such as Korea, Japan and China.

Smart Digital Solutions

Alibaba has been swiftly recruiting independent store owners in China to adopt its retail management platform called ‘Ling Shou Tong’, which means ‘Retail Integrated’.  They are reinventing the cramped and dated convenience stores that exist across China.  Originally rolled out in August 2017 and within four to five months, there were over 600,000 stores, or around 10% of China’s mom-and-pop shops using the Ling Shou Tong platform.  The new platform provides a comprehensive suite of digital services to make the store more-efficient and help their bottom line.  When goods are ordered via the Ling Shou Tong mobile app, consumer analytics of their store suggests to them the items that are in highest demand by their customers, to make the process smarter. Digital orders are centralized with Ling Shou Tong, eliminating the need to buy from and negotiate with multiple distributors. Restocking of fast-moving goods is done next day from city warehouses, while regional warehouses guarantee two-day delivery for less-frequently purchased goods.

Also, the Ling Shou Tong platform provides omnichannel fulfilment services such as click-and-collect, ship-to-store and ship-from-store, which are all examples of areas where retailers have experienced considerable success but at the same time have struggled with implementation. The platform walks through the steps the c-store need to take to optimize omnichannel fulfilment for lower costs and faster delivery times.

Another Chinese player,, recently announced that it will open hundreds of unmanned stores, and that it intends to license its technology to third-party retailers. These convenience stores utilise movement and facial recognition to determine what consumers are buying.  These 24-hour unmanned c-stores can be unlocked using a QR code generated by the consumer’s smartphone.  Consumers can then pick out their items and place them on a checkout, which scans and tallies up purchases.  These items are then paid for via a smartphone e-wallet such as Alipay and WeChat Pay.

Ant Financial, one of China’s largest fintech companies, owned by Alibaba, is testing a payment service called ‘smile to pay’ powered by facial recognition. The company partnered with KFC in China in September 2017.  This may not be exactly a c-store example, but similar non-cash payments are commonly being deployed in quick service restaurants and casual dining restaurants.  Vending machines has been another example where payment has shifted from cash to digital.  In Japan where street vending machines are almost as common as street junctions, there are new smart vending machines being deployed.  By taking an image of the shopper, the smart vending machine recommends a drink option to them based on their gender and age.

On the other hand, in Europe, regulation, such as the second Payment Service Directive (PSD2) was a response to unsatisfactory consequences following the first PSD.  The PSD’s vision statement was to create innovation and encourage greater competition in the payments and financial services sector.  We are only just starting to see the early implications of the PSD2 in Europe but not to the same degree as we have seen in the Far East where innovation has been driven by the technology companies and retailers - not the industry regulators.  We should not be surprised to see a PSD3 initiative if PSD2 fails to deliver on its promise.  C-stores is a sector of retailing that is influencing how people pay and anything that makes payment frictionless, as we have seen with the overused example of Uber, it is expected to be rapidly adopted.  European c-stores need to learn from their colleagues operating Asia.

Engage with EDC

Lets discuss how EDC can assist your business

Connect with us

Become part of
the EDC team

Want to join the EDC team?

Find out more
Back to top