Trials are occurring in a small number of stores in London and Edinburgh, and are currently only available to staff members. Tesco claims that initial responses are positive, and hopes for the mobile payments to continue bolstering its shopping experience for customers.

“It is advantageous for retailers to have a white label mobile payment app, because they can integrate their loyalty programs, collect data on promotional programs consumers are responding to, and offer convenience to shoppers,” said Nathalie Reinelt, analyst at Aite Group.

Bar code system
Consumers must sign in to use the PayQwiq service through their Tesco log-in for its online grocery service. Credit card details can then be added, after which guests will receive a confirmation email with a PayQwiq application download.

Shoppers seeking the in-store experience will scan their products at the checkout line and sign in to the PayQwiq app using a pin number before selecting which card they would like to pay with. The app then produces a QR code on guests’ mobile devices which is scanned to pay for the items, and also adds Clubcard loyalty points onto their accounts.

Bar code mobile systems are consistently driving mobile payment growth and are proving popular compared to NFC-based payments (see story).

Starbucks has seen wide success with its bar code mobile system, which allows a register to scan a 2D bar code, a move that makes checkout easier for both cashiers and customers. The Starbucks bar code system also functions as an example of the importance of having quick scan options, coupons and loyalty points all in one mobile wallet.

“White label mobile payment applications are leaning much more toward QR code and bar code technologies,” said Ms. Reinelt. “There is no question that NFC is much more secure, by way of using the secure element – either on the phone or in the cloud – and the fact that NFC technology tokenizes the credit card data.

“Historically, the issue was that NFC was not an option for white label applications. Android devices were locked out until early 2014 due to the fact that mobile carriers controlled the secure element on the phones.

“Merchants who wanted to offer consumers a mobile payment experience had to bypass the technological limitations of NFC and turned to QR code and bar code technologies instead.”

Tesco’s mobile platform
In February, Tesco announced plans to accelerate its digital platform by developing features such as converting the entire loyalty Clubcard program to mobile and lowering its delivery subscription service price.

The retailer hopes that testing a digital wallet will circumvent long checkout lines and be more convenient for customers looking for a quick shopping process.

“Most consumers own smart phones and so enabling consumers to conveniently (the operative word) pay by smart phone is fast becoming a requisite,” said Nish Modi, senior vice president of product and innovation at SecureNet. “However, retailers need to keep the overall objective – fast, convenient and safe checkout experiences – clearly front and center of any technology they implement.”

Tesco’s app syncs with all major credit cards and has a daily limit of £400. These parameters will likely work well with the bar code payment system, as NFC payment systems received little support until the iPhone 6, per Mr. Modi.

“Since QR code and bar code technologies are considered card-not-present (CNP) transactions, there is a balance to be struck in how much risk retailers want to accept, since fraudulent use of this app would be charged back to retailers due to how these transactions are classified,” said Ms. Reinelt.

“The CNP status also means they will be charged higher transaction fees, so a spending limit makes sense for the initial roll out of this application.”

Final Take
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York