The omnichannel experience is a growing part of the business model for UK-based food retailer The Co-op, including the need to strike a balance between maximizing security and minimizing friction online. The retailer is putting both needs front and center as it expands same-day city center deliveries to 650 stores while also continuing the rollout of its frictionless checkout pilot.
Fraud prevention can be a bit of a tightrope walk: retailers certainly need to avoid costly chargebacks and maintain PCI compliance, but rejecting legitimate transactions that are flagged as suspicious can generate friction. This is a challenge that affects every company involved in payments, not just retailers, making it relevant across channels.
“I very much see payments as a global ecosystem,” said Paul Fletcher, Solution Specialist at The Co-op. “Wherever you are on the payments chain, from merchant to gateway to card issuer, we’re all trying to reduce and prevent fraud. It benefits the entire ecosystem and relation to our customers directly.”
The Co-op has improved its capabilities in this area through the adoption of ACI Worldwide’s ReD Shield platform. The tool has improved the retailer’s accuracy in gauging whether flagged transactions are actually fraudulent, while ensuring that legitimate customers can make their purchases without any setbacks.
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“It’s very early days but I see our decline rate going down,” said Fletcher. “Perhaps where we would challenge a transaction through lack of good intelligence before, we will now accept and process that transaction. Any fraud we help take out of the ecosystem is beneficial to all customers.”
Frictionless Checkout Presents An Educational Challenge
The Co-op also has worked with ACI Worldwide on other payment-based innovations, including the expansion of its Pay-in-Aisle service pilot. The retailer has seen a 10% decline in the use of physical cash over the past two years, which has caused the use of contactless payments, credit and debit cards and other payment methods to account for more than 50% of transactions.
Shoppers at the more than 30 participating stores can now scan any non-age-restricted item and check out using Google Pay or Apple Pay with the press of the button. The program reduces lines during the lunchtime rush at The Co-op’s urban stores, letting busy shoppers grab their food and get out quickly. Shorter checkout queues also relieve some of the burden on associates, letting them focus on customer experience rather than manning the till.
The program’s biggest challenge has not been technological but informational: educating shoppers who have trouble getting used to the idea of leaving without paying at a register. The retailer has introduced signs to help educate consumers about the process and is working on updating the app to provide better feedback once the payment goes through.
“What we found with Pay-in-Aisle is a psychological battle that we didn’t expect,” said Fletcher. “I think this is similar to self-checkout tills, which took some four or five years to become adopted by customers. With Pay-in-Aisle, for example, we used to get feedback saying, ‘We feel terrible walking out of the store without people knowing we paid,’ and often people would look around and they’d literally be waving their phones in the air to show our in-store teams that they actually paid. There’s a psychological barrier to that — it’s just human nature.”
The tech side of Pay-in-Aisle has been comparatively simple, according to Fletcher: The Co-op’s app uses ACI Worldwide’s Universal Payments Merchant Payments solution for its card processing operations and to secure payment data through Point-2-Point Encryption. Using the same solution provider for Pay-in-Aisle, fraud prevention and other programs allows the retailer to monitor various payment-related programs through a single portal.
“I try and get platforms on a single pane of glass, so when I look at our infrastructure, I can see a complete view,” said Fletcher. “Very shortly, I’ll be able to see all of that information on a single pane rather than looking at three or four individual gateways or platforms.”
