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Mobile payments expected to make cash registers, checkout lines obsolete

Lines at the cash register?

What lines? Come to think of it, what cash register?

Some retailers are beginning to do away with stationary checkout counters and are launching mobile checkouts that let customers pay for merchandise anywhere in the store through clerks who use handheld devices and apps. And we aren’t just talking techy, edgy companies like Apple.

Starbucks and Nordstrom are doing it. So is Indianapolis-based Finish Line. JC Penney will roll out mobile checkouts next year.

Could it be that the traditional checkout line will someday — and someday soon — disappear?

“This is the road to the extinction of the cash register,” said Richard Feinberg, professor of consumer sciences and retailing at Purdue University. “We have just gotten on the highway and not yet reached 65 miles per hour, but it will happen — sooner rather than later.”

Take new data from Square, a San Francisco-based company that offers a mobile payment service that lets retailers accept credit or debit cards by attaching a square credit-card reader to an iPhone, iPad or Android device.

It is signing on new clients daily — and lots of them.

In March, Square said it would process $4 billion in payments annually. In April, it upped that to $5 billion. Its latest tally? $6 billion.

“It’s a running number,” said Lindsay Wiese, a spokeswoman for Square. “The market is ripe for mobile payment adoption, and we’ve been seeing this on our end.”

Finish Line happens to be on the cutting edge of the trend. On Tuesday, it finished up the test of its mobile payment system at more than 30 stores. The same day, it began rolling out the system at its other 600 stores nationwide.

The concept is simple. All the store’s employees carry iPhones capable of scanning merchandise and swiping credit cards. Receipt printers are hidden underneath shelves throughout the store. So are bags.

Customers paying with plastic can make a purchase right where they are standing. The receipt can be emailed to them, printed off or both. Customers paying with cash can complete a portion of their transaction at a mobile station but still have to hand over their money at a checkout counter.

One store manager, George Jordan, said customers are “loving” mobile check out. He was right.

One customer checked out recently while still sitting on the bench where she had tried on her new shoes. Another flagged down an associate in the middle of the store to make a quick T-shirt purchase.

After Nicholas Brown checked out, which took all of 60 seconds, he was impressed.

“It’s cool,” said the Indianapolis man. “You don’t have to wait in line all the time.”

Time-saving convenience is exactly what retailers are looking to give customers as they implement mobile payments.

“This is customer-centric. It’s about transaction speed,” said Terry Ledbetter, chief information officer for Finish Line.

He said it’s no accident that the system will be in place at all of the company’s stores just in time for the holidays.

Ledbetter hopes as the rush hits stores, mobile paying will help with “line busting” and, in turn, give Finish Line an advantage over competitors.

“It’s just a reality. We sell products that other retailers sell,” he said. “So, we have the same green pair of shoes, but we can get the customer in and out faster. We win.”

Teresa Crace said she was shocked by the speed of her checkout at Nordstrom Rack. The retailer launched its mobile checkout in July at the Indianapolis store.

“I just had the purse I wanted in hand, wandering toward the cash register, and (the clerk) just stopped me and checked me right out,” said Crace, Zionsville. “Kind of nice, over-the-top service.”

That service is what some retail analysts see as the primary advantage of offering mobile payments.

“This untethers sales associates from cash wrap and allows them to circulate the floor to give better customer service,” said Butler University marketing professor Kate King.

That can help increase sales revenue, she said, as can other options on the mobile devices.

The devices, after all, usually do more than check out. They can look up product details, available inventory and even arrange to have products shipped directly to customers.”

“Overall, it creates a better customer experience — seamless, simple, more satisfying,” King said.

Starbucks is about to become the latest to satisfy its customers with a mobile checkout. It recently announced a partnership with Square in which it will use Square registers in all its stores to accept credit and debit payments. It will also begin accepting payment via Square’s mobile app.

Starbucks already had its own alternative payment method, a mobile app it debuted in 2011 to let guests pay via their smartphones at the cash register. Since then, it has been used more than 60 million times in the U.S., spokeswoman Lily Gluzberg Simon said in an email.

JC Penney, a century-old department store, also is embracing the new technology. It will be using mobile checkout at all its stores by the fall of 2013.

During the company’s second-quarter earnings conference call, CEO Ron Johnson said the company already was in the test phase.

But for all the raving about mobile checkouts, there can be a downside for retailers, said Feinberg, the retailing professor. It might be too quick.

“Associates might check consumers out before they have completely shopped or seen something they didn’t know they wanted as they walk to the cash register,” he said. “If you cash someone out too soon, you may be losing sales.”

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