The Future of Payments

U.S. consumers have more options than ever when it comes to buying groceries. They can choose how and when they make their purchases by shopping in a physical store or online, and they’re also being given the freedom to pay for their groceries in myriad ways.

Not only are consumers wading into these new options, but many have come to expect them as they seek out seamless shopping experiences. A flash of an Apple Watch or a QR code scanned on a smartphone is now accepted as payment at food retail establishments throughout the country, but are all consumers sold on these newfangled options?

[Read more: "USDA Piloting Contactless SNAP Payments in 5 States"]

According to a recent study from Boston-based PYMNTS.com, more grocery shoppers prefer to pay with debit, at 42.3%, while 31.9% choose to pay with a credit card. Cash or check is the preferred payment method for 13.4% of shoppers, while 6.1% choose to use a digital wallet. 

Although debit still reigns supreme, PYMNTS.com also found that groceries account for 62% of all purchases made using a digital wallet, and 4% of all in-store checkouts made by members of Gen Z are done so using a digital wallet. While it’s clearly important to offer standard means of payment at the register, alternative options are becoming ripe for the picking.

Payment Options Run the Gamut

Perhaps pushed forward by a pandemic-era desire to keep germs at bay, contactless payments have become an increasingly important checkout feature for many grocery shoppers. Today, Apple Pay, Google Pay, Samsung Pay and others are accepted at hundreds of grocery banners, and technology companies and grocers themselves are also creating new solutions.

In 2019, The Kroger Co., based in Cincinnati, rolled out its Kroger Pay option, which allows customers to link a card to the Kroger app and use their coupons, loyalty card and payment all in one scan. Bentonville, Ark.-based Walmart offers a similar payment option, as well as a mobile scan-and-go service that lets shoppers scan items as they shop and than pay at a self-checkout kiosk. Giant Eagle, Albertsons Cos., Lowes Foods, Meijer, Hy-Vee, ShopRite and many other grocers offer similar options.

San Francisco-based Instacart, meanwhile, is creating a contactless payment ecosystem through its Connected Stores solutions. Independent grocer Foodcellar Market was the first retailer to fully roll out Instacart’s Scan & Pay option, which lets shoppers scan a QR code found on a sign at the front of the store and automatically add items to their digital cart and check out anywhere via their smartphone. 

“Our customers have shared their surprise at how easy it is to use Scan & Pay – there’s no need to download an app or learn complicated technology,” says Metin Mangut, co-founder of Long Island City, N.Y.-based Foodcellar Market. “We’ve been really pleased with the early adoption, and our store associates love how Scan & Pay reduces stress for them, too.”

Amid inflationary times, many grocery shoppers are also turning to buy-now-pay-later (BNPL) options in an effort to stretch their dollars at the register. A PYMNTS.com study found that 40% of Millennial and 37% of bridge Millennial grocery shoppers are “very” or “extremely” interested in such a service.

Stockholm-based financial technology company Klarna partners with Walmart to give customers the option of splitting the cost of their purchase into four separate interest-free payments, with other companies, including Four, Zip, Affirm and Splitit, offering similar services at food retail.

Another payment option seeing mass adoption is online acceptance of electronic benefits transfer and Supplemental Nutrition Assistance Program (EBT SNAP) payments. Millions of shoppers throughout the United States depend on SNAP benefits, making this an important component of e-commerce operations across the grocery industry. 

A Host of Considerations

Customers are becoming increasingly interested in these options, as well as everything from self-serve kiosks and endless aisles to smart shopping carts and in-app payments, giving grocers a lot to consider in terms of the flexibility they offer at checkout. Wegmans Food Markets, for example, rolled out its Scan app in 2019 and ramped it up during the height of the pandemic, but discontinued the service last year in the wake of shoplifting losses.

“Early in the pandemic, we quickly rolled out our Scan app to provide a contactless in-store shopping option,” Rochester, N.Y.-based Wegmans noted at the time. “Scan users have told us they love the app and the convenience it offers. Unfortunately, the losses we are experiencing prevent us from continuing to make it available in its current state.”

Other grocers have lamented similar issues, but technology advancements are helping to ensure that these problems are addressed head-on. Instacart’s contactless payment solution, for instance, promises speed, convenience and added budget consciousness for customers, but it also lets retailers employ a dashboard aimed at monitoring Scan & Pay transactions in real time to monitor loss prevention and stay on top of any pattern shifts. 

Customer data safety is another issue to keep in mind when considering new payment options. Third-party companies like Miami-based payment systems provider ACI Worldwide offer merchant omni-tokens that protect data across all in-store and online payment channels, as well as point-to-point encryption that protects customer data throughout the payment process.

The New Era

At the end of the day, new payment options will only continue to proliferate and shoppers will remain loyal to those grocers that offer convenience, speed and a positive experience. According to ACI’s “Who’s Shopping at Your Store?” report, “Grocers have a massive opportunity to migrate to new types of digital and hybrid services that resonate with — and lock in — increasingly connected consumer audiences. 

“Grocers must respond by continuing to evolve with their customers while accelerating innovation and finding new ways to harness payment tech to best service their changing needs,” the report continues.

Indeed, ACI notes that enabling these payment methods, as well as others, gives grocers an unmatched opportunity to remove friction, minimize fraud and false declines, seamlessly connect services, personalize loyalty and experiences, and much more.