Front-End Security

New checkout systems deliver shorter lines, faster payment and absolute security

Every retailer knows that no matter how much a customer may enjoy spending time shopping, when it comes time to checkout, the customer wants the payment process to be as quick and painless as possible. Every customer wants shorter lines and faster payment. So do retailers, because shorter lines and faster payments make for happy customers. However, while retailers want shorter lines and faster checkouts, they absolutely require secure payment processing and verification.

Fortunately for retailers and consumers, new front-end payment-processing tools are helping make the checkout process faster, easier and even more secure. Both large and small retailers are choosing different types of front-end technology to improve the checkout process, from new printing capabilities to biometric and contactless payment.

At Magruder's, Washington D.C.'s only locally owned supermarket chain, which operates eight supermarkets as well as Wine & Spirits Shoppes throughout the D.C. area, one key to improving front-end payment processing has been the deployment of Epson's TM-H6000II multifunction printer with TransScan digital check imaging and ProofPlus ID scanning as part of the company's POS system rollout, following an NCR FastLane upgrade project.

Reduced liability

A major driver behind the decision to deploy was Magruder's check-cashing business, a service that's popular with customers but one that brings with it security issues and liability. Combined with the chain's alcohol and tobacco sales, the check-cashing service gave Magruder's reason to seek out check and ID imaging capability to reduce liability as well as deter fraud while streamlining the check-cashing service.

"Liquor sales and check cashing services are a large part of our business," explains Glenn Gibson, Magruder's CIO. "We use the printer to image checks and ID cards, lowering our overall liability while speeding up transaction time for our customers." Reduced liability and fraud translates directly into bottom line savings for Magruder's, and as Gibson points out, "Lowering our costs allows us to be more competitive in our marketplace."

More Security, Less Contact

One of the hottest technologies in this area is contactless payment, such as MasterCard PayPass. A cardholder with a PayPass-enabled MasterCard taps the card against a terminal equipped with an RF chip, and the transaction is completed, no card swiping or receipt signing required. In August of 2005, Meijer Stores, a family-owned and operated grocery and general merchandise supercenter retailer operating 171 stores throughout Illinois, Indiana, Kentucky, Michigan and Ohio, became the first supercenter chain to accept MasterCard PayPass as an option at all stores.

Later that year, Meijer Stores began accepting PayPass at all fuel pumps. In addition to payment processing, the project integrates CRM, as the card doubles as a loyalty card, allowing customers to earn points toward "Mejier Bucks," which can be redeemed for merchandise.

The Meijer project was undertaken with three specific goals in mind: "First, increasing the speed of checkout and fueling translates into labor savings for us, as well as improving the customers' experience," says Michael Ross, director of marketing strategy for Meijer Stores. "Second, we see this as an emergent form of payment, and as an early adopter of this new payment option, this is part of our continuing effort to invest in solutions for serving customers quickly and efficiently."

The retailer's third goal reflects a total industry initiative. "We wanted to support the card association and position the card in the marketplace," Ross notes. "It takes both a retailer and a banker to implement a new payment processing system, and we wanted to be proactive and demonstrate our commitment to this technology in hopes that the banks will recognize it and issue our customers contactless cards."

A smooth implementation helps Ross remain committed to the new technology. "It was a very easy implementation," he notes, "which is a great reflection on our internal team." Meijer customers also have responded well. "We've had a very favorable response from our customers. They enjoy and appreciate the time savings at the pump and the checkout lane. It's a quick, convenient method of payment that's saved us money through reduced labor costs."

Card-free and Secure

Some retailers are opting for technology that relieves customers of even the small burden of carrying a checkbook, or even a credit or debit card. In Cincinnati, bigg's hypermarkets (a wholly owned subsidiary of Supervalu) became the first retailer in Ohio to offer customers the convenience of the Pay By Touch biometric payment service. Customers sign up either online or at in-store kiosks, linking their finger scan to their choice of checking account or Discover Network Card.

"This cutting edge technology is yet another way we can provide our customers quick, convenient service," says Denise Fenik, director of advertising for bigg's. "We strive to quickly implement any technology or service that enhances the shopping experience for our customers."

Security is assured by not actually using fingerprints, but by creating a set of 40 data points that are encrypted and converted to an algorithm. Biometric experts claim it is impossible to recreate the fingerprint, even if the algorithm and encryption are cracked.

At bigg's, the initial phase of the deployment involved only two stores, but the response has been sufficient to support the company's decision to roll the technology out in all 13 bigg's stores by the end of 2006.

License To Pay

The next step in front-end payment processing may have just appeared on the market. The Fastlane Payment Network, set for launch at the Electronic Transaction Association Convention in April 2006, promises to allow customers to conduct transactions using their driver's licenses. While it's possible that customers will have privacy concerns about using their driver's licenses as payment cards, there's no question that some will find the system attractive because it uses a card that almost everyone already carries.

Because Fastlane uses driver's licenses, it won't be marketed to consumers, but directly to retailers. Will it fly? That remains to be seen. Since it's not even been officially launched as of this writing, there are no users to speak with, but it's worth noting, as it shows that payment processing technology continues to be both evolutionary and revolutionary, and that retailers and vendors continue to work toward the ultimate goals of payment processing — shorter lines, faster checkouts and more security.