When I was a kid, my dad told me the story of when the first modern grocery store opened in his town. This was the first store with long aisles for shoppers to walk down, pick what they want to buy off the shelves and pay for them at the cash register at the front of the store. Before this, grocery stores were small and everything was behind a counter. You’d ask the clerk for the items you wanted, he’d gather them for you, and you’d pay right there. The new store’s shopping experience is exactly what we’re used to today, but at the time, my dad wondered, “what’ll keep people from just walking out with stuff?”. In a small store, the counter makes it easier for a single person to maintain and manage it. But my dad had internalized an unintended implication of the counter: that shoppers couldn’t be trusted to pay for their groceries.
Yesterday’s announcement of Google Wallet marks the beginning of a transition to an cloud-based smartphone-enabled wallet we’ll someday all be carrying. There are lots of exciting implications for this shift. It isn’t hard to imagine waving your smartphone over a sensor instead of swiping your credit card at checkout. An electronic wallet could do away with plastic cards altogether. Good riddance.
Electronic wallets simplify person-to-person and small business transactions as well. You can bet the folks at Square are working to get rid of that dinky headphone-jack credit card reader they give their users, in favor of just tapping two smartphones together.
The greatest implication to commerce I see is the redefinition of our experiences in retail spaces altogether. Imagine no cash registers at all. You walk around a store, choose what you’d like to buy, and walk out. The exit detects the RFID signature of the items and your smartphone is automatically charged. That’s it. But what would keep people from just walking out with stuff? Consider the Apple Store today, where the cash registers in the back do nothing to compel visitors to pay before they leave. The only things doing that are the friendly security guard, sensors by the exit, and human decency. I’m sure people try to steal stuff sometimes, but I argue that the lower-friction buying experience is worth the potential risk.
I predicts more stores will go this route and eventually try even lower-friction buying models once electronic wallets (and RFID-tagged products) become ubiquitous. I’m not sure exactly what those models will be, but less than a generation from now, the idea of waiting in line to pay at a cash register will seem quaint and anachronistic, like video stores do in the age of internet movie streaming. My dad’s grocery store didn’t need counters to keep people from stealing – and done right, I don’t think we’ll need cash registers either.