Mobile Payments Today sister publication Kiosk Marketplace recently interviewed vendors and industry analysts about whether mobile devices and apps pose a threat or opportunity for self-service kiosks and vending machines. That answer depends on the vertical markets in which kiosk and mobile technology are being deployed.
"Undoubtedly, mobile poses a threat to kiosks," Yankee Group analyst Jordan McKee said recently. "Collectively, we're growing more comfortable performing a variety of tasks via mobile devices. By and large, many tasks performed at self-service kiosks such as airline check-in can now be performed using smartphone apps."
Yet this doesn't completely diminish the value of self-service kiosks. "Many hotels have self-service kiosks that dispense room keys upon check-in," McKee said. "It's easy to imagine a scenario where you check in on your mobile device and scan a QR code on the kiosk to obtain your room keys."
Walmart and Northeastern supermarket chain Stop & Shop are examples of large merchants that have instituted mobile shopping apps but still use self-service terminals to complete the overall checkout process. "Kiosks and mobile devices can enjoy something of a symbiotic relationship as long as you think creatively," McKee said. "Going forward, self-service kiosk developers must get imaginative and provide value that can’t be delivered by mobile devices."
Basic kiosks
"In certain vertical markets and for some types of kiosks, the threat from mobile is real and has already happened," said Frank Olea, CEO of U.S.-based kiosk manufacturer Olea Kiosks. "Demand for basic information kiosks and kiosks displaying retailers' websites has dwindled, as so many people have smartphones, and these types of kiosks can't attain an ROI. That's why we're seeing a rise in cheap tablet-based kiosks which can fill certain low market voids."
But Olea doesn't believe kiosks will be "wiped off the map" by mobile. "Currently, we're seeing loads of customers who are on their second or third generation of kiosks rethinking kiosks' role in their businesses," he said. "However, instead of replacing kiosks with other technologies, they are looking at kiosks as part of their overall omnichannel customer engagement solution."
"It's fair to say mobility will produce some disruptive consequences in the [kiosk] market, but I wouldn't characterize them entirely as a threat," said Lori Salow Marshall, CEO of BYNDL, a mobile managed service provider for unattended retail which handles all aspects of customer engagement from demand generation, to payments, loyalty and customer service. "Companies should think of mobility as another vehicle to deliver their brand and services to customers, and use all the delivery vehicles at their disposal — kiosks, tablets, smartphones — to provide outstanding customer experience."
"Some level of self-service kiosks will survive because of the instant gratification of making impulse or necessary purchases," said Cary Sagady, senior vice president of product management and network services at vending machine payments provider USA Technologies. "The mobile device offers the ability to search for competitive pricing or functionality before purchasing goods or services at kiosks."
Airlines grounding investment
Global airlines' investment in self-service kiosk technology will decline in the next few years because of the rise of mobile devices, a March 2014 study by U.K.-based processor Worldpay found.
For its "Alternative Payment and Distribution Landscape: Airline Distribution Channels" study, Worldpay surveyed 68 global airlines in May-July 2013.
According to Worldpay, 40 percent of airlines surveyed believe self-service kiosks will be less important in the future. "Nearly a third (29 percent) are investing in mobile payments, while 17 percent are investing in kiosks," said Mike Parkinson, Worldpay's vice president of airlines. "This is due to the opportunities and coverage offered by mobile devices, such as improved data submission and handling. Mobile offers a marketing lifecycle connection to airlines' loyalty programs, as opposed to the single-event transactions that take place at kiosks."
Parkinson said there are several perceived challenges with kiosks, including the cost of implementation and maintenance, difficulty integrating with current processes and the inability to read EMV chip-and-PIN cards.
Many airport kiosks are CUSS — or Common Use Self-Service — kiosks shared by multiple airlines. "CUSS kiosks have technical challenges when handling carrier-specific inventory and financial data, such as encryption," Parkinson said. "To support individual payment connections for different airlines, CUSS kiosks require separate encryption keys for each carrier. This means they can run slowly, leading to delays for users."
However, while kiosk investment will decline over the next two years, many airlines still plan to implement additional customer services at their kiosks such as check-in and seat reservations, Parkinson said. Just under half (42 percent) plan to sell seat upgrades via kiosks in the next two years and take advantage of other up-sell opportunities such as paying for onward travel.
"Digital boarding passes are taking off, and smartphones and kiosks increasingly work together to support this," Marshall said. "I see more airline kiosks, not fewer. But placement and use cases for airline kiosk versus smartphone or tablet technologies should be thought through. There's room for both based on the relevant use case. I see kiosk technology moving up in functionality and replacing more staff functions, and mobile coming in around it."
"Over time, we might see fewer check-in kiosks as people have boarding passes on their phone or printed at home," Olea said. "The key will be ease of use. If it's extremely easy for the older generation to check in online or via mobile, they'll go that route. But kiosks can scan passports and biometrics, and do things such as print baggage tags and weigh bags that phones simply can't do. For those things, kiosks will still be king."
Motorola calls on both
"Motorola has offered price-checker kiosks in stores for decades," said Tom Moore, director of North American retail and hospitality at Motorola Solutions. "The next generation of kiosks which Motorola will offer will incorporate Android tablets and interact with consumers' mobile devices. We see retail kiosks moving towards offering transactions as well as information."
Motorola has found that retailers want it to augment its kiosk strategy with a mobile strategy. "Our customers are telling us that mobile isn't replacing kiosks but is augmenting it," Moore said. "Kiosks and customers' and sales associates' mobile devices are part of an omnichannel strategy for retailers, so we will be offering a holistic solution (http://www.kioskmarketplace.com/articles/from-connectivity-to-smart-infrastructure-motorola-prepares-for-retails-future/)."
In Western Europe, Motorola has seen significant adoption by retailers of its purpose-built MC17 mobile shopping device which customers use to scan items in stores. If they scan their retailer loyalty card into the MC17, they receive special offers and discounts. They then pay for their purchases at a self-service checkout terminal.
"We have over 1,000 implementations of our MC17 Personal Shopper in Europe," Moore said. "But we've seen very little uptake in North America of people using their own mobile device or retailer-supplied personal shopping devices such as MC17 to make in-store purchases. So far, mobile hasn't been a threat to self-service checkout kiosks."
Motorola's biggest MC17 implementation in North America is at Stop & Shop. "Customers can shop at Stop & Shop using an app on their mobile device, they can use self-service scanning and check-out kiosks, or they can use the MC17," Moore said.
Mobile as an opportunity
USAT's ePort Connect platform is a suite of cashless payment services for small-ticket, self-service vending machines, enabling them to accept payments from cards and NFC (Near Field Communications) enabled mobile devices. Over 100,000 vending locations using USAT's ePort POS device and ePort Connect platform have been enabled with NFC contactless payments technology.
"We view mobile as an opportunity, which is why it's part of our underlying strategy for ePort Connect," Sagady said. "For example, our MORE loyalty scheme enables specific local discount offers or bonus points to be sent to consumers via their phones at kiosks via location-based technology, making kiosk purchases more enticing."
Sagady said that, since the unattended retail market has been cash-oriented for years, mobile-enabled cashless consumer engagement services represent a significant new opportunity. "This is because vending machine operators now have a way to track consumer purchasing behavior and drive repeat business through offers and coupons," he said.
The growing micro market vending segment in offices and factories increasingly relies on credit card or mobile wallet types of payments, and is a target for USAT, Sagady said. "Micro markets are perfect environments for mobile payments combined with offers and rewards for participating in the operator's programs," he said.
In a partnership with U.S. mobile wallet scheme Isis, USAT has enabled 75,000 of its NFC-capable ePort readers with Isis SmartTap technology for contactless payments and rewards. To encourage customers to use their Isis mobile wallets at participating vending machines, USAT has launched the Fifth Purchase Free program. After making four contactless purchases using Isis at any participating vending machine, the customer receives a fifth purchase free.
In May 2014, USAT formed an alliance with BYNDL to bring mobile marketing capabilities to USAT's customer base.
"Because mobile apps capture information about consumers, they display a profile of each user," Marshall said. "This means that, when a mobile vending app communicates with a kiosk, the interaction can bring up content that is tailored to the consumer's interests."
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