Presented by Wirecard

Consumers are no longer tethered to the cash register — a fact that we widely recognize and embrace. What can more often go unnoticed is that merchants are no longer tethered to the traditional POS, either. Now every point — in time and in place — holds the possibility to connect with consumers but also to convert into a point of sale.

Retailers are highly motivated, therefore, to develop payment ecosystems that best capitalize on this opportunity-rich yet diffuse environment and to integrate it into the in-store experience. In its 2017 Mobile Business Report, Business Insider reported that in-store mobile payments will reach $503 billion by 2020, reflecting a compound annual growth rate (CAGR) of 80 percent over five years. Yet today, just 15 percent of enterprises are using AI, and 31 percent have it on their agenda over the next year — which means that AI-enabled services will only continue to grow.

Clearly, the way to create a frictionless experience for consumers wherever they are, as well as to harness and utilize the proliferation of data now available, is to master the applications of artificial intelligence. Following are four ways AI has the greatest impact on the point of sale. 

1. AI radically changes the physical experience of making purchases

In May, we conducted a consumer survey in which 40 percent of 18- to 24-year-olds said they would let a robot or other automated technology shop for them, provided it understood their preferences.

American brick-and-mortar retailers have begun to implement NFC technology at the POS and in NFC tags throughout their stores — moves that enable a much wider range of payment options, including contactless cards and most mobile wallets, as well as deeper consumer brand engagement. We might think of AI as a way to “level up” all of these technologies and encompass them under a single ecosystem that frees shoppers and merchants from the checkout queue and allows consumers to pay with the method they prefer.

Beyond the POS, AI technology can drive completely new retail experiences that eliminate checkout altogether. Wirecard’s recent partnership with SES Imagotag is one example of the Electronic Shelf Label model — a “smart store” design that allows customers to walk in, pick up and scan their selections with their phones, and walk out. Freedom from the checkout line creates convenience for consumers, increased customer service opportunities for merchants, and greater flexibility for both.

2. Automated POS analytics can find out in real time what consumers buy and when they buy it

These two pieces of information alone provide a wealth of leverageable data. On the individual level, analytics can tell you who your customers are and the kinds of offers and rewards they’re most likely to respond to. When applied in the aggregate, this capability offers rapid and highly accurate insights about a company’s location, peak hours of operation, inventory, customer demographics, and more which it can use to shape the brand, modify products and services, reduce operational costs, increase operational efficiencies, and more optimally serve customers.

The integrative aspect of automation taps into the real power of AI-driven POS. It integrates all payment experiences, real and online — mobile apps, chat payments, Instagram/social payment, purchases from your website, and payments in your store. All channels are connected and are updated in real time. Why is this so important? Because the only way to deliver a superior customer service is to understand the customer’s experience at any touchpoint throughout the user experience.

3. Intelligent POS makes marketing even smarter

At Wirecard, we speak frequently about how smart data can gather the numerous and multiplying consumer data points to build more effective marketing campaigns. The Smart Data Collective has echoed this idea, writing that as the data that businesses feed into AI grows in both diversity and volume, the algorithms that sort through these mountains of data will turn out more and more precise, individualized, and real-time targeting. In other words, AI will help marketers get better at learning their customers’ needs and preferences and then generating products, services, offers, and discounts as the opportunities arise – or even before. According to the Smart Data Collective, the potential outcomes of real-time marketing alone can increase sales opportunities by up to 20 percent over a marketing strategy that leaves AI out.

4. Payment ecosystems built with AI are more secure than those that aren’t

In 2012, AI startup funding was a little less than $600 million; in 2016 it was $5.021 billion. A significant portion of those investments have been funneled to the payments industry, where AI has enormous leverage potential, particularly in managing risk and security. We can apply algorithms to payments that can both accelerate payment for known, loyal customers and block suspected fraud in real time. The cost savings and efficiencies just from reducing chargebacks makes these investments worthwhile.

The sea change in retail affects everyone — merchants, consumers, and payments facilitators. In wave after wave of new technology, consumer expectations shift and capabilities multiply and accelerate. The way to stay ahead is with AI-assisted payments. Now more than ever, it’s through payments that we understand consumers; build more efficient and customer-driven shopping experiences; create more efficient business systems; and decrease risk for businesses and consumers alike.

Susanne Steidl is Chief Product Officer on the Executive Board of Wirecard AG. She is responsible for the company’s major product innovations globally and led its 2017 expansion into the U.S. market. She writes about technology and global payments strategy.

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