Plugging Into Alternative Payments

Modern payment means can increase a merchant’s reach, provide customers with more choices and help to simplify checkout at the register and at the pump.

By Howard Riell, Associate Editor

An increasing number of c-store operators—especially those trying to better accommodate customers who prefer to pay through mobile means, or who rely on merchants to use tools like SNAP, Google Wallet, store apps and uploading Amazon Cash cards—are realizing the importance of providing customers with more payment options.

“A lot of people are using ‘non-traditional’ ways of payment today,” said Connor Blakely, founder of YouthLogic, a marketing consultancy. “Previously, PayPal was really the only way to transfer money, but now you can send money through text messages, the Supplemental Nutrition Assistance Program, or SNAP, Apple Wallet and Venmo. Especially with Gen Z, a lot of us are using mobile means of payment and don’t carry cash. This is especially important for people who largely rely on tips or companies that only accept cash.”

More and more, payment-savvy customers are seeking out payment-savvy retailers.

“For most customers, retailers who embrace alternative payment technologies will be the preferred choice,” said Matthew Hudson, a retail consultant based in Fort Worth, Texas. “We have already seen customer behavior to support this premise. Customers have been changing their normal place to shop to new locations that use alternative payment options. Since the items they are shopping for in the c-store world are so (diverse), it’s easy for them to change locations.”

According to U.S. Department of Agriculture 2016 data, approximately 117,591 of the nation’s 154,535 total convenience stores participate in SNAP and about $3.7 billion in SNAP benefits are redeemed at convenience stores, which amounts to 5.63% of all total benefits used. The USDA’s Food and Nutrition Service administers the SNAP program.

Eva Rigamonti, an associate at the international law firm Steptoe & Johnson LLP, said c-stores have been involved with the program for more than a decade.

“SNAP is an anti-hunger program, and was created to provide low-income Americans with access to food,” said Rigamonti. “Most often, c-stores want to participate because participating allows them to serve all of the people in the communities where they operate.”

That said, the requirements to participate in the program can be cumbersome for c-stores, which are much smaller than grocery stores, have limited shelf space and only receive food delivery one or two times a week. Thus, a c-store may decide it is too difficult or burdensome to participate, particularly because of stringent requirements.

After protests from convenience retailers and input from the National Association of Convenience Stores, the FNS did lessen eligibility requirements in the form of a final rule released Oct. 16, 2017. Among some of the changes, the rule now requires SNAP-authorized retailers to stock at least seven (up from three in years past) varieties of items in each of the USDA’s four staple food categories—meat, poultry or fish; bread or cereals; vegetables or fruits; and dairy products—to include one perishable item in three of those categories.

The new SNAP stocking policy states that in order for retailers to be eligible to participate in SNAP, they must offer fewer than seven different varieties of food items in each of the four staple food categories with a minimum depth of stock of three stocking units for each staple variety, Rigamonti explained. This means that, on any given day of operations, a retailer should offer a total of 84 units for sale (three stocking units, seven staple varieties, four staple food categories, equaling 84 units).

The convenience store operator considering applying for a SNAP license should think about how he or she will be able to meet the stocking requirements, particularly in light of delivery constraints and shelf space for perishables.

“In addition, a store will have to think about how much it will cost to stock the necessary items, some of which may not be big sellers and may spoil,” Rigamonti said. “Then, a store should balance those costs against the benefits of participating in the program and the ability to service all of the customers that live nearby and shop at the store.”

Of course, not every alternative payment system is as controlled as SNAP. In fact, as payment systems become more popular, they are finding a wider market. One example is Gulf Pay, which was rolled out in the middle of last year to retail partners of Gulf Oil.

The Gulf Pay app launched in both the Apple app and Google Play stores last June, and is accepted at participating Gulf retail locations throughout select New England and New York markets.

“Gulf Pay enables Gulf customers to navigate to the nearest Gulf gas station, pay for fuel at the pump, and purchase products inside the convenience store utilizing fast, simple and secure mobile payment technology,” said Nikki Fales, director of marketing for Gulf Oil in Wellesley Hills, Mass.

The app also promises convenient, secure and seamless shopping experiences for customers by allowing payment authorization directly from the comfort of their vehicle. Users can also use the app to locate the closest Gulf station, access live pricing and reliable directions and view station offerings.

“With this innovative technology, Gulf is ahead of the competition and current and prospective customers are approaching us to learn how they can participate in this exciting program,” Fales said. “The station implementation is simple, as the retailer only needs to be EMV compliant and have a technician make a quick visit to configure the point-of-sale system to ensure appropriate communication between both our app developer and the station pumps. There is no additional hardware necessary at the pumps to accept Gulf Pay, and the EMV upgrade now enables our stations to provide better service and savings to our drivers.”

Pat O’Connell, executive vice president of Energy North Group in Tewksbury, Mass., which operates 35 Haffner’s locations in Massachusetts and Maine, said his company has been actively rolling out the Gulf Pay app at all of its Gulf Oil-branded sites.

“The petroleum industry is constantly changing, and one trend we are seeing with all brands is that mobile payment is the future,” said O’Connell. “It’s important to separate yourself from your competition, and we believe that Gulf Pay is another tool that will help us bring in more loyal Gulf customers.”

Energy North has also successfully rolled out ExxonMobil’s Speedpass+ at the majority of its ExxonMobil sites. As with Gulf Pay, he wants to provide customers with what he called the latest and greatest technology to support any and all types of customers and their preferred methods of payment.

“One of the major benefits that consumers are telling us is how fast and easy the app is to use,” said O’Connell. “Authorizing a pump through the app is quick and painless, and many customers are shocked by how easy it is to use. The last benefit that we see is how secure mobile payment is through the app.”


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