software engineering Oct 23, 2017

Digital Payments in an Order-Ahead World

Who doesn’t like to skip the line? We’re quickly getting accustomed to the convenience of digitally-powered “order ahead” experiences that let us do just that. It’s game-changing for consumers, merchants and financial institutions alike.

Perhaps it’s shopping online to pick up in-store, or putting in a mobile order for something we can fetch later at a pickup-and-return locker or one of the innovative new kiosks emerging at big retailers. Two of my own favorites are pulling out my phone to order and pay for lunch so it’s ready when I get there, or beating the crowd for a morning caffeine fix.

These are just a few instances of how in-store experiences and ecommerce are coming together like never before. Traditional physical retailers are adding digital elements to their customer experience, and native ecommerce players are blending digital models with physical locations. As a retailer, no matter which direction you’re coming from, the goal is the same — increasing convenience for customers while also driving sales. As consumers, we benefit by getting the goods and services we want faster and more reliably.

Despite the synergies, there’s still friction in the process: Merchants are in the early days of pioneering how pick-up works as part of order-ahead. If your go-to cafe suddenly doubles its business thanks to order-ahead options, the experience can feel frustrating to other customers who find themselves waiting as “order-aheaders” swoop in for their triple-shot pumpkin spice skinny lattes without so much as a backward glance. Innovations are emerging to improve that, from dedicated pickup windows to digital order-at-table options.

Despite the synergies, there’s still friction in the process: Merchants are in the early days of pioneering how pick-up works as part of order-ahead.

Companies such as Starbucks, Panera, McDonald’s and Walmart are pioneering explorations of new hybrid commerce models. Starbucks first introduced a mobile order-ahead feature in 2015. McDonald’s and Panera are deploying new experiences both in-store and online — ordering kiosks in restaurants, “mobile-order to table” and more — all focused on rapid, convenient pick-up and delivery. And Walmart’s app ecosystem aims to create a compelling payment experience through solutions such as Walmart Pay, a digital price-match tool and a new “scan-and-go” app being tested at several stores that lets you scan items while shopping and pay using your card on file in the app.

Payments are also evolving to meet the needs of this new era — both to ease checkout for consumers and to help merchants better capture sales and meet their customers wherever they’re transacting.

Think about it. Credit cards and debit cards were not designed for ecommerce. They’re incredibly serviceable, to be sure, with built-in protections that are wonderful for digital transactions. But as a payment mechanism, they require consumers to transcribe 16-digit numbers and security codes into websites and apps. And they leave a trail of credentials to keep track of and protect.

In some ways, the traditional in-store checkout process worked pretty well once you got to the front of the line. You’d put your items on the conveyor belt, the cashier would check you out and bag them up. Now, though, technology-enabled checkout and payment is becoming more critical for both online and offline shopping. In hybrid commerce you might be in a physical store but paying through ecommerce-like checkout — whether ordering ahead via the merchant’s app or website, or in-store via a third-party app like MasterPass or Apple or Android Pay.

At Capital One, we’re developing innovative solutions that help our customers feel confident about staying on top of their spending in this new world and that enable merchants to optimize their success in serving them. One area of focus is to extend services to this new card-on-file-everywhere reality that really make our customers’ experiences better, safer and leave them with a greater sense of control.

One area of focus is to extend services to this new card-on-file-everywhere reality that really make our customers’ experiences better, safer and leave them with a greater sense of control.

Capital One Wallet, for example, provides a safe and easy way to use your credit or debit card directly from your phone to pay for purchases at favorite stores. If an account number is compromised in any way we can instantly give you a new number in the application to begin using for ecommerce, including the security code and expiration date.

Real-time notifications are another tool that helps us assure no one is charging you for things you don’t want. We’re finding that real-time alerts are one of these surprise-and-delight features: The first time an unwanted charge shows up instantly in a notification, you wonder how you ever lived without it.

Similarly, our Second Look feature is a spending alert tool that uses machine learning to identify unusual spending patterns and send an alert — for possible double charges, a repeating charge that is higher than last month, or a tip higher than a customer’s norm. After all, perhaps you really did get great service and leave a 35% tip in gratitude — but perhaps it was a mistake. With Second Look, you get a chance to confirm it at a glance or dispute it if need be.

That’s the kind of control that serves both consumers and merchants. And it’s the kind of control that Capital One can provide with new digital tools to make paying for things simpler, with real-time transparency that provides a stronger sense of security in this new hybrid world.

Tom Poole
SVP, Business Analysis, Digital Commerce
@TomPoole

DISCLOSURE STATEMENT: These opinions are those of the author. Unless noted otherwise in this post, Capital One is not affiliated with, nor is it endorsed by, any of the companies mentioned. All trademarks and other intellectual property used or displayed are the ownership of their respective owners. This article is © 2018 Capital One.