麦奎因：购买彩票的非现金支付之路

Cashing in on Cashless Solutions

Consumers are increasingly expecting cashless transactions in all aspects of their lives, and the lottery industry needs to offer solutions to capture the opportunities.

By Patricia McQueen

Despite all the forecasts of a cashless society, cash will probably never disappear entirely. It does, however, account for fewer and fewer payment transactions around the world as time goes on. Some countries are actually committed to removing cash from their commercial payments systems – the movement seems strongest in the Scandinavian countries. For example, Denmark made headlines last spring when the Danish government proposed a new law that would allow store owners to refuse cash payments in favor of non-cash methods.

In the cashless realm, consumers have more choices than ever – credit and debit cards, Apple Pay, Google Wallet and a host of other services – and all of them offer many advantages that cash can’t touch. These include speed, convenience, guaranteed payment for merchants, and security and transparency for all parties.

Mobile payments are by far the fastest-growing non-cash segment, and the medium is accelerating as major players like Apple and Google make giant strides forward. A recent report by Future Foundation, which studies trends in consumer behavior, noted that “...as smartphones are slowly becoming capable of organizing every aspect of our lives, so it seems a natural process that they become the central device for handling all aspects of our retail transactions – with peripheral wearable tools paired with our devices likely contributing to the payment experience.” T he report concluded that “Cash will not disappear and will still be highly favored in certain contexts (and among certain demographic groups). But, elsewhere, it will come to be viewed as an increasingly inconvenient option – too slow, too clunky, too imprecise.” In particular, it is the smaller everyday purchases where cashless transactions will really shine. And as expectations evolve, consumers expect better service and speed in the retail environment. “Mobile phones (and paired, wearable devices) will remain at the forefront of this trend, progressively able to facilitate more and more of our routine commercial needs.”

Perhaps no one understands this as well as Starbucks, which is the shining example of mobile payment success to date. Its mobile app is linked to the company’s loyalty program and what is essentially an electronic wallet, so consumers can manage their accounts, add funds and make in-store purchases while earning points. In 2013, Starbucks claimed to account for as much as 90 percent of the $1.6 billion in smartphone purchases made in all U.S. retail stores. And by the end of 2014, the company reported more than 13 million mobile users in the United States alone; those users made about seven million mobile transactions a week, about 16 percent of the chain’s total transactions.

“The beauty of this is that you set up the Starbucks ‘wallet’ on your phone or the internet and manage your account from there,” said Andrew Crowe, IGT’s Vice President, iLottery, North America, “then simply launch a barcode on your mobile screen and present it to the cashier to complete a purchase. You could easily do the same thing for lottery – scanning your phone via the lottery terminal.” This is not unique to coffee – it’s just a mobile cashless payment method that consumers are increasingly adopting.

A similar type of system is already being used by the Georgia Lottery. There, as part of its iLottery program, an e-wallet was developed that also allows players to purchase lottery tickets at retail using funds in that e-wallet. Players can present their player card at a retail establishment when purchasing lottery tickets; their card is scanned and the funds are deducted from their account for the purchase. In addition, any winnings on terminal-based games, up to $5,000, are automatically deposited back into the e-wallet. Players can also add funds to their e-wallet at retail, in addition to funding it online via bank transfer or debit cards. “The system is transforming the retail lottery experience in Georgia,” said Crowe.

That system is just one type of closed-loop cashless models lotteries can use that offer convenience and security. Another involves using self-service lottery vending machines with card readers installed, added Paul Riley, IGT’s Vice President, Product Innovation and Research Development. The machines could, depending on the rules in each jurisdiction, accept debit and/or credit cards, Apple Pay and similar systems, or a lottery’s player ID card of some sort that would link back to an e-wallet the player manages online. Such machines would have a number of additional benefits for lotteries and their retail partners.

For example, self-service machines that require cash are more expensive, larger and more complex to operate and labor intensive, since they require someone to physically remove the cash among other things. A machine which doesn’t allow cash can be smaller, cheaper and less operationally complex. In addition to providing a new way to interact with consumers, cashless vending machines “could open up whole new trade styles for lotteries,” said Riley. “They would be more retailer friendly.”

The road to cashless

There are three aspects to how and when the lottery industry makes inroads in cashless payments, explained Riley. Perhaps the easiest is the technology – the ability to cover all the variations from jurisdiction to jurisdiction, solutions that satisfy lottery security requirements and everything else involved in lottery sales. “That’s all being worked on, and I know we can get there,” said Riley.

A second aspect, one much less certain and not under industry control, is the regulatory and legal perspective – what is allowed in each jurisdiction. Once the industry figures out the technical aspects of what it can do, it still must comply with individual rules and regulations, which can vary widely by jurisdiction. Some only allow payments by cash only, some are cash and cash equivalents (like debit cards), others allow everything including credit cards.

And finally, the business model must be proven – that incremental costs from card interchange fees and other elements will be more than compensated for with increased sales. “Based on precedents in other industries, we feel pretty strongly that if it’s done correctly, it’s going to be worth it,” said Riley. “There’s almost always a good business case for going cashless,” agreed Crowe, citing McDonald’s. As recently as 10 years ago, most of the fast food giant’s stores didn’t accept credit cards. They did a pilot test, and it wasn’t long before every single store had a card reader front and center at the registers. “They saw a significant lift in sales and average purchase, so the incremental sales more than covered the banking fees that they were incurring.”

And it could very well be the same for lottery. “If ultimately it drives more sales, even if you are paying a little more incremental cost for each transaction, it’s still worth it in the long run because we are making more money for good causes,” said Riley.

An e-wallet goes the furthest to reduce the banking interchange fees charged by credit and debit card usage. By having consumers fund their accounts in larger increments, the fees for each individual card use are minimized – instead of a $1 lottery purchase using a card, the player might make that purchase using an e-wallet that has been funded in $10 or $20 increments, lessening the impact of fixed banking fees incurred. That model has been smartly used by Starbucks to limit the fees it incurs on each cashless purchase.

And it’s not a long leap from the mobile apps many lotteries are using today to the addition of an e-wallet feature. More and more lotteries offer increasingly sophisticated mobile apps that are loaded with player conveniences – check-a-ticket functions, retailer locators, and the ability to build number selections in an electronic play slip to be scanned at retail, are just the tip of the iceberg. Adding an e-wallet, connected to a lottery’s player’s club, is a natural evolution regardless of a lottery’s ability to offer actual sales through online and mobile channels.

Even if a lottery never gets the ability to offer interactive sales, going this route “improves the retail experience for both the consumer and the retailer – lottery will be a faster, easier transaction,” said Crowe. And should that lottery ever get internet sales, it has a valuable built-in database of active mobile users.

Consequences of inaction

So what will it take for the lottery industry to catch up with other industries and meet consumer expectations for payment experiences? Riley said the first step could be to get card acceptance deployed on self-service retail lottery vending machines. It will take some effort to ensure that all the industry security requirements are met, but he doesn’t see that as a road block.

Once the sales data starts coming in from the machines with cashless options, it can be analyzed in great detail – whether there are incremental sales, how large the average purchase is, variations by state, by trade style and even by product, and how the economics are with respect to interchange fees. A successful introduction in one jurisdiction will lead to adoptions in others, and could even be used to convince government regulators, who didn’t envision cashless payments when lottery rules and regulations were established, to change their lottery statutes.

And if the industry doesn’t achieve a widespread adoption of cashless payment options? “It will be a huge missed opportunity” for the lottery industry, especially given the impulse nature of many lottery purchases, emphasized Riley. For example, if there’s a selfservice machine showing off a large jackpot up for grabs, and there’s a card reader or Apple Pay option, a shopper can easily purchase a ticket if so inclined. If that shopper has no cash, that impulse buy is potentially lost.

Not only is it a missed opportunity at retail, but failure to adapt to a cashless society could also contribute to lottery becoming even less relevant to younger generations.

“There are many examples where other industries have adapted to consumer preferences,” said Riley, noting that many beverage vending machines now take cards. “Cash is never going to go away, but consumers are increasingly adopting or preferring other ways to pay. And lottery is not yet keeping pace with that – we are still a 100 percent cash business in most cases. We have to follow where the consumers go. If consumers start to adopt new payment processes, then we have to support what they are using at both self-service and retail.”

And what’s out there tomorrow may be nothing like what’s out there today. “The bottom line is that we all have to keep an eye on this, because it’s morphing quickly.”