Tesco seem to be getting ready to show their hand when it comes to creating a mobile digital wallet/loyalty combination.

Just to start off with a quick disclosure: I used to work on the Tesco mobile team, however this was not a project I worked on or was aware of and this news has already been published by other sources and on Twitter. I am just adding my take to the discussion.  I hope you enjoy. 

Recently there seems to be a glut of companies looking to make in-store payments easier.  Already we have featured very strong offerings from Paypal, Flypay or even pay by telephone number  on the blog.

Tesco Combined Clubcard and Digital Wallet

If you have been wondering what Tesco(the UK’s largest Supermarket Chain) are doing about making in store payment easier, then, wonder no further.  Tesco have announced a limited trial of their combined digital wallet and clubcard loyalty system dubbed Payqwiq.  Currently the trial is available to internal staff and only in selected stores in London and Edinburgh. (Presumably  to get a northern and southern perspective on the technology)

Works with many kinds of cards.

Tesco’s digital wallet will allow you to store a multitude of your credit cards online in the account.  Although there is no fixed date for launch, the system clearly is already set up to cover all the main credit card companies in the form of:

Visa

Mastercard

Maestro

Amex

Setup

Tesco seem to have touched right bases when it comes to setup.  The solution is made up of a responsive mobile website which allows it to work on all sizes of devices from a small mobile device, to a large desktop screen.  To login, the system currently uses your existing Tesco username and password to streamline setup.  From there its a simple case of loading your cards onto the account and setting up a mobile pin.  The account also includes support for multiple devices which will allow you to take advantage of your payment system from any device.

The instore payment experience

When it comes to payment, you will just need to enter your pin and scan a “QR code” into the in-store scanner to make your payment.  The key advantage that Tesco will bring is that Payqwiq will automatically push all your clubcard loyalty points straight into your account without needing to scan a separate clubcard.

Security first

When it comes to digital wallets, security is paramount.  The system will come with a one click “Lock the Account” button, which can be used in the event you lose your telephone.  There is also a handy list to see all the previous transactions that have gone through the account, just in case the the thief has been splurging on new Ipads at your local Tesco Extra.

Does this make sense for Tesco?

With a company the size of Tesco, in one of the most competitive markets, doing anything that makes it easier for your customers to buy from you and lock them into your ecosystem is bound to be a winner.  At the moment, the Payqwiq solution is really limited to just another weapon in the war between the supermarkets.  I fully expect the other players in the grocery business to be hot on the heels of Tesco to roll out their own payment solutions.

Tesco doesn’t move like a speedboat, but when it does move, it moves big.  I expect to see Tesco rolling these sort of payment features into their mobile apps, mobile websites and even onto their desktop websites.  It could even roll into partner companies and other parts of the Tesco group including, Giraffe, Harris and Hoole, Euphorium Bakery and partners like Esso.  Removing the friction around payment is a big challenge, and if they manage to get it out fairly quickly, they potentially could rival Apple Payments and Paypal as a source.

The largest hurdle I can see slowing things down, is the potential rumoured takeover of Clubcard backbone Dunnhumby by Private Equity house TPG.  There are also other bumps coming up in the road.  Tesco have already dropped plans for their new smartphone, and is rumoured to be considering spin off/ closing digital services like Blinkbox.

Using Tesco Scale for Good

For me this combined loyalty and mobile payment offering is actually closer to Tesco’s core business value of making it easier for customers.  I know its pretty unlikely, but if they allow other small businesses to take advantage of this same service and become partners with Tesco, they really will have found a new entire way to achieve their 3rd business value which is to use Tesco’s scale for good.

Find out more at Payqwiq.com