Article

The five-second checkout

Some retailers predict that the use of RFID will increase sales. Simply put, they are faster and easier to use, and don't limit purchases like a fixed amount of cash in someone's wallet. How will RFID and kiosks change the shopping experience?

August 5, 2004 by

How will radio frequency ID tags (RFID) and kiosks change your retail shopping experience in the near future? Imagine yourself checking out at your local discount store. But this time you don't take anything out of your shopping cart. You just wheel the whole cart by a kiosk containing a reader that instantly and simultaneously reads every item in your cart.

The kiosk looks like a display screen on a stand or a futuristic POS system.  The screen on the kiosk immediately displays every item price along with the total and tax. So now it's time for you to pay. At once, you just wave the "fob on your key chain" within a few inches of the total displayed on the kiosk screen, and Voila!, the screen displays your name and asks you for a final verification; then you squeeze your key fob as you pass it a second time near the screen. Transaction complete! You take your printed receipt and you're on your way.

The whole transaction took less than five seconds. And, if you don't like printed receipts, you can set your "key fob" to instead record all the prices inside the fob. When you get home, you plug your key fob into your home computer's USB port, and you have a perfect copy of your purchases stored on your computer in an easily viewable form acceptable to home/business accounting programs like Quicken. Also, no more receipts to tally at income tax time.

If you are hearing or visually impaired, you have a special key fob that does all the above, but it's set to invoke voice prompts along with visual prompts throughout your checkout experience. Finally according to MIT's Auto-ID Center, "theft will be drastically reduced because items will report when they are stolen, their smart tags also serving as a homing device toward their exact location." I

If you are someone who frequently looses your keys, you may be concerned about the safety of the fob. No need to worry, because you'll be able to set your key fob to still require your personal signature on an electronic signature pad like you do now, or require a quick fingerprint or iris scan. Then you won't worry when you lose your keys.

Taken to the extreme, the above five-second checkout can be reduced to one second. Here's how. Put the RFID antenna in a specially designed exit aisle. The customer wheels their cart full of goods thru the specially designed exit aisle that will only accommodate one cart exiting at a time. The antenna in the exit aisle first detects and verifies the customer's credit card (key fob) and then detects all their goods and then automatically charges the customer. That's it. The customer is done and is on their way to their car.

The checkout process is now one second long with the customer being automatically billed. They system may also email them an itemized cash register receipt. Obviously, some security measures are needed to avoid people quickly exiting without paying. But, we have now reduced a multi-step checkout process to a one-step (i.e. just exit) checkout process. A kiosk display may show some final confirming information for the customer to view.

Predictions

So will this vision happen? Well, some industry pundits claim we're heading in this direction quickly. Wal-Mart, the nation's largest retailer, will begin RFID pallet tracking with some of its suppliers by the end of 2004.  Wal-Mart plans to have its top 100 suppliers using RFID on pallets and cases by 2005. So there will now be a lot of activity in the use of RFID as other retailers play catch up. Wal-Mart will probably not proceed with item-level trials until 2007 or later. By second quarter 2004, Proctor & Gamble will equip 80 percent of its products with RFID tags.

No battery means RFIDs can be much smaller than most digital gadgets and can be placed permanently in hard-to-reach places. The pet ID implanted under the skin of my cat's neck is the size of a grain of rice, and it never needs replacing. Hitachi for example has a new chip that carries its own built-in antenna, takes the technology down to a new level of tiny: at less than half a millimeter square, it's about the size of a pepper flake. Yet the 128-bit ID number embedded in each Hitachi chip is big enough, in theory, to catalog every grain of sand on the world's beaches and deserts, plus every star in the known universe, several times over.

At less than 10 cents apiece in bulk, RFID tags are fast approaching a price point that makes them a viable replacement for bar code stickers. First, though, they'll have to run the same gauntlet that UPC bar codes did: privacy gurus and paranoids alike have already declared RFID the latest incarnation of Big Brother. 

RFID employs a numbering scheme called EPC (for "electronic product code"), which can provide a unique ID for any physical object in the world. The EPC is intended to replace the Universal Product Code (UPC) bar code used on products today. But RFID tags and their kiosks/readers are a lot more than just replacements for barcodes.

There has been much public concern that RFID can be used to track the location and movement of almost anything. This can be a blessing as illustrated by Michelins recent plans to put RFID chips in their tires. I think I would want a tire vendor to be able to immediately identify when my tires were made, where, and whether there are any known recall or safety problems - even better put the sensor on the highway and give me a warning signal immediately.  Remember the Firestone tire scare. Well, Michelin intends to build RFID chips into their tires, so that they have better control over tires in the field no matter where they are. And they say the RFID chip will last longer than the tire. That's fine with me, especially if it provides me with a safer tire.

Still the public is concerned that an RFID reader can be placed anywhere, and it can track what you are wearing if the tags are still embedded in your clothes, or what you are carrying. Furthermore if the antenna can read your "key fob" ID, it can know who you are, what you're wearing, what your carrying, and where your going? Is "big brother" watching?

Another public fear is that retailers will use RFID to track consumers' movements after they have left the store, and will inundate them with junk mail based on their purchase patterns, says the survey from analyst GartnerG2. Removing the tag at the checkout removed concerns for about a third of respondents, while 80 per cent say they would accept RFID if it made a tangible improvement to their shopping experience. If checkout time was reduced to 5-seconds compared to huge delays during holiday sales, I'd be in favor of RFID too!

Since the Auto-ID Center's founding at the Massachusetts Institute of Technology (MIT) in 1999, it has moved forward at remarkable speed. The center has attracted funding from some of the largest consumer goods manufacturers in the world, and even counts the Department of Defense among its sponsors.In a mid-2001 the center wired the entire city of Tulsa, Oklahoma with RFID antennas to prove its ability to track RFID tagged packages.

 Payment Methodology

MasterCard has been testing its new PayPass system in Orlando, Fla. It promises a nationwide rollout in 2004, beginning primarily at quick-service restaurants and other places where people tend to be in a hurry. The new Mastercard PayPass credit cards work much like the Speedpass system that Exxon Mobil has accepted for quick payments at its gas stations since 1997. But the key chain fobs carried by Speedpass' 6 million users are good only at ExxonMobil stations and a handful of other retail outlets.

In contrast, credit cards that incorporate this technology could be used anywhere regular plastic is accepted -- as long as stores install the new readers. The card companies have worked out technical standards that would let one reader handle multiple brands of contactless cards.

Still, you'll probably have to wait for a while to use the new RFID credit cards. Forrester Research senior analyst Penny Gillespie recently predicted it will take a few years for contactless cards to go mainstream.

Some retailers predict that the use of contactless credit cards or keyfobs will increase their sales. Simply put, they are faster and easier to use, and don't limit purchases like a fixed amount of cash in someone's wallet does. So, restaurants and other "quick service" retailers see them potentially increasing their business.

One foot in front of the other

RFID architecture works, but there are still problems to overcome. The RFID tags used in the current trials interfere with older wireless LAN equipment. RFID signals also may not be able to penetrate through Metal containers or bottles of liquid. Attention is now focused on implementing systems at distribution centers. Once the product-level complications are worked out, the next step will be applications where consumers will be able to checkout multiple products all at the same time. The largest constraint has been cost.

Item-level tagging depends on the availability of tags that cost 5 cents or less, while current tags can cost up to ten times that. Wal-Mart has found that it is cost justifiable to use 40-cent tags on pallets. At the other end of the scale, some vendors are concentrating on using RIFD seals on cargo containers. 

Since Wal-Mart is pushing RFID compliance, many suppliers are focusing on getting ready for the changes. This shockwave of supplier compliance will put other retailers in the go position for implementing RFID. All around there is a tremendous opportunity for technology companies, systems integrators, retailers and manufacturers to invest in RFID and EPC technology. It's something to think about and even to start planning for now.

The role of the kiosk

Consumers will not have concerns with how RFID works, but they will want a means to control their experience with it. Kiosk technology will be the customer-facing technology that interprets the RFID, displays information back to the consumer, accepts payment methods, and processes the transaction in a timely fashion. With this, the vision of a five-second checkout process at a retailer's kiosk equipped with RFID will come true.

The real process of using RFID, from the perspective of the consumer, will be an invisible one. However, the interactive, self-service kiosk will be used as a physical device that will act as the administrative tool for the consumer to become aware of the "invisible" shopping experience, verify items purchases, and connect with the consumers payment method of choice.