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Contactless Payment vs. Cash: Digitalising the Point of Sale

Smartphones are already a popular way to pay. And many customers are open to alternative payment methods such as invisible payments. Which other alternative concepts are becoming established at the point of sale (POS)?

6 min

In-store payments have transformed over the last two years. Driven by the pandemic, contactless payment methods using a card or smartphone at the POS have gained traction. The POS is becoming more and more digitalised. The ECC Payment Study Vol. 26 shows that contactless payments have overtaken coins and notes, even in cash-loving Germany. 65 percent of the surveyed consumers frequently pay with contactless methods. Merchants have reacted to the digital shift and 70 percent of them offer contactless payment. But contactless payment methods are not the only development that consumers and merchants are taking notice of. New alternative payment concepts are starting to establish themselves at the POS.

The Top Alternative Payment Concepts at the POS

Checkout areas that do not require conventional tills and fewer cashiers are one example of a popular alternative payment concept. Consumers and merchants are already familiar with self-checkouts at the point of sale. Large chain stores, especially major grocery shops and supermarkets, are increasingly offering self-checkouts as a new way to pay at the POS. However, there are also other alternatives that are mostly still in the pilot phase. The ECC Payment Study provides interesting findings about how and where they can be used.

1. Self-Checkouts

Self-checkouts use a regular POS terminal. Customers scan their products themselves and then pay at the terminal by card, in cash, or contactless. Self-checkouts are already widespread and popular: According to the ECC study, around three-quarters of consumers have already used one. In addition to these typical self-checkouts, some retailers also offer other forms of self-scanning checkouts.

2. Other Self-Scanning Concepts

There are various forms of self-scanning checkouts. The most common are self-checkouts with handheld scanners, also called self-service checkouts. Less prevalent are self-scanning solutions where customers scan products using a handheld scanner or their smartphone and pay for products via an app. 8% of consumers claim to have used this “scan & go” concept already, according to the ECC study’s findings.

3. Mobile Checkouts

Mobile checkouts enable sales staff to advise customers in store and directly accept the payment using a tablet or smartphone if the customer decides to purchase. This means it is no longer necessary to queue at a till. Phone shops are one example of stores that more commonly use mobile POS solutions.

4. Checkout-Free Stores with ‘Just Walk Out’ Technology

Checkout-free stores could have a significant impact of the future of payment in retail. ‘Just-walk-out’ concepts are currently being trialled in various pilot projects. There are two main approaches. One uses tracking sensors, and the other is based on RFID chips. With the sensor approach, customers log into an app when they enter the store and log out when they leave. Cameras and sensors on shelves register the products that customers take. Upon leaving the store, the payment process is triggered in the app.

Checkout-free stores based on RFID technology use special codes on products. Customers log into an app when entering the store and can simply take the products they want. At the store’s exit, the products are automatically scanned in a special checkout zone and the payment is completed via app.

Consumers and Retailers Are Open to Alternative Checkouts

What benefits do merchants see in using alternatives to conventional checkouts?

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Quicker and more convenient checkout process for customers

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Cost savings

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Reduced workload for cashiers

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Higher revenue

According to the ECC study, consumers are showing much interest in alternative payment concepts at the POS. The reasons for this are clear. Alternative payments make shopping faster, easier, and more convenient. More than half of the surveyed consumers (55%) see a faster payment process as the main benefit. Retailers, on the other hand, see potential cost savings (49%), reduced cashier workload (46%), improved customer experience (46%), and a better checkout process for customers (53%) as the main reasons to consider alternative payment at the POS.

The ECC study reveals that around half of the merchants surveyed are interested in installing self-checkouts and other self-scanning solutions. There is a similar attitude towards checkout-free stores and mobile checkouts. Over a third of the merchants surveyed see potential in these concepts. From the consumer perspective, the study shows that self-checkouts and handheld scanners are already widely used. Moreover, more than four in ten consumers can imagine trying out a checkout-free store. This indicates a trend towards invisible payments.

Invisible Payments: The Next Stage of POS Payments?

‘Just walk out’ technology for checkout-free stores is one of the concepts behind invisible payments. These are payments that customers can make without the need for a wallet or a smartphone. There is no need to go to a checkout. Customers simply register on a platform, such as a store app, and save their payment details. When they leave the store, depending on the technology, the products are automatically scanned and payment is completed in the app.

Invisible payments are still being tested. However, the ECC study clearly shows that customers and merchants alike are showing much interest in checkout-free stores. This is particularly true for shopping for everyday needs. The customers’ demand for quick, easy, and convenient payment in store is driving the development of invisible payments. Merchants should follow the trend and consider offering invisible payments to their customers. After all, not only customers benefit from this new, faster form of payment, but also the merchants.

About the ECC Payment Study:

The ECC Payment Study Vol. 26 examines the use of smartphones as a shopping and payment tool. It providers merchants with a comprehensive source of information about current developments in payments amongst various target groups. The study’s findings help merchants make strategic decisions about their own payment offerings.

The study is based on a January 2022 survey of 2,000 consumers in Germany. Also in January 2022, 241 German merchants (online, multichannel, and retail) were surveyed. It is the only study on the market that reveals payment insights from both the consumer side and the merchant side.