In 2016, Amazon Go made headlines when it launched its first cashierless store in Seattle. With 10 stores currently open and plans to launch thousands more, Amazon Go has altered its original concept and agreed to start accepting cash at their cashless stores.
Leveraging deep learning technologies, cameras, smart shelves and technology developed for self-driving cars, Amazon Go enables customers to walk into stores, put items in their bag, walk out and have their purchases automatically charged to their Amazon account.
The cashierless model poses a new set of risks when it comes to card-not-present transactions. “This model is a hybrid of what e-commerce merchants have always experienced,” said Kimberly Sutherland, Vice President, Fraud and Identity Management, LexisNexis Risk Solutions. “It’s a remote payment experience combined with a physical retail experience. The merging of the two creates an experience of operating almost remotely but consumers control their checkout in store.”
Because users are most often relying on a mobile app for payment transactions, it is easier to monitor for fraud, Sutherland said. “There is a direct correlation between the use of mobile apps for payments and lower fraud rates.”
Since its inception, though, the company has received pushback on its cashless policy with some claiming that relying solely on technology and card-not-present transactions discriminates against those lower-income customers who don’t own a phone or use Amazon for online shopping.
According to the Pew Research Center’s 2018 Mobile Fact Sheet, 16 percent of adult men and 20 percent of adult women in the U.S. owned a cell phone but not a smartphone. “Cash-free stores have grown more common in recent years, but lately, governments have started to push back,” wrote Jacob Kastrenakes for The Verge, also noting that several states have been putting together legislation to ban the practice of cashless stores.
“As technology evolves there will be more companies moving to offer cashierless payments, but this will require enhanced technology solutions that can verify users seamlessly. Passive biometrics and physical biometrics will play a critical role in bolstering security that drives cashierless services,” said Ryan Wilk, VP of Customer Success for NuData Security, a Mastercard company.