Mobile order-ahead payment schemes are set to transform the U.K. retail industry over the next few years with leading payments providers and high street businesses vying to capitalize on this emerging digital trend.
The new market has grown rapidly in popularity in the U.S. since 2015, instigated by quick service giants such as Starbucks, Domino’s, Taco Bell and, most recently, McDonald’s — companies which have all developed technology to provide order-ahead payment services through their mobile apps. Such is the pace of progress that Business Insider estimated order-ahead payments to be worth $38 billion to the quick service restaurant business alone by 2020, making up 10.7% of their total sales.
These global chains also offer mobile order-ahead in the U.K., but outside of this vertical, other retailers have yet to really embrace this new genre of mobile payments. The main exception is U.K. pub chain Wetherspoon, which invested heavily in its Order & Pay app which launched last year.
One of the reasons for the caution has been Starbucks’ high-profile glitches with order-ahead, which have scared off some businesses. An influx of mobile ordering reportedly created large customer bottlenecks at peak times in busy locations, although this is thought to have been an operational problem rather than an issue with the payments technology.
However, industry insiders predict order-ahead payment services will begin to achieve more widespread adoption in U.K. corporate catering, encouraging the transition to the high street in the near future.
“We expect this to be a big thing in closed corporate environments in the next few years,” said Michael Rolph, CEO of Yoyo Wallet, Europe’s fastest growing mobile payments and loyalty marketing platform. “It’s all about convenience, the idea that you can be between meetings, order your coffee ahead and it’s already there waiting for you, without having to waste any time queuing. And then that will translate to the high street chains like Pret, especially in the big cities.”
But while Starbucks and Wetherspoon have been prepared to spend millions developing apps powered by their own in-house order-ahead technology, not every company is willing to invest this kind of capital. This is creating opportunities for independent payments providers to develop platforms to power apps offering order-ahead services across a range of businesses.
Last month, Yoyo partnered with digital ordering company Preoday to integrate order-ahead technology into its existing digital wallet platform, which allows users to purchase items at a range of retailers while automatically collecting and receiving loyalty points and discounts.
This new order-ahead technology is currently deployed as part of catering at the Vodafone corporate offices. “It’s been live for three weeks and already, 22% of all transactions being made are orders placed through our service,” Rolph said. “We expect that to rise to somewhere between 50% and 75% of all transactions within three months.”
Café Nero is among the high street brands interested in using Yoyo’s platform to power order-ahead payments, and it could soon be a feature at many university campuses after a successful trial run at Oxford Brookes University.
“They set up an order-ahead counter at one of their busiest coffee shops,” Rolph said. “And during the course of the trial, which was powered through our technology, they saw a 22% conversion from people who were buying in-store to ordering ahead and collecting.”
Rolph points out that in the coming years, it may even be possible to pre-order goods through a banking app. With the rise of open banking-compliant APIs enabling customers to link their bank account to independent providers such as Yoyo, there’s an appetite among many banks to facilitate order-ahead services. Last year, Yoyo launched an API partnership with Starling Bank with further integrations expected in the pipeline.
But while there is a confidence among major businesses such as Starbucks and Wetherspoon that order-ahead is the future of retail, the real proof will come in the next few years once more data emerges.
“At the moment we don’t have enough insight into the data behind the transactions,” Rolph said. “We don’t know whether their sales really are showing uplift, and equally it’s not clear whether loyal customers are using this order-ahead feature. Or whether it’s just anyone using it, but it’s actually annoying the loyal customers. We will see, but the merchants are convinced this represents a sales opportunity.”This post was originally published here