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Loss Prevention

Proceed with Caution

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As the use of digital communication and mobile devices expand into more areas of consumer life — including paying for in-store purchases — one component in the process is raising concerns: e-receipts.

Pioneered by Apple more than a half-dozen years ago, e-receipts are digitally generated records of retail transactions sent by merchants to customers via e-mail. Benefits are numerous, including saving time at check out for both parties. Merchants can also cut costs on POS supplies and labor, since employees don’t have to change ink and paper rolls as often. And there are the sustainability factors — using less paper and ink and avoiding potential concerns over substances like the Bisphenol A (BPA) used in some receipt printers.

Perhaps most advantageously, the retailer also gets a customer’s e-mail address in the process.

Pros and cons
Loss prevention professionals say this is not necessarily a win-win situation for retailers and their customers, noting that e-receipts could make apprehension of suspected shoplifters more difficult and more expensive. While conceding that e-receipts support mobile payment technologies, “There are many loss prevention factors to explore,” says Joe LaRocca, vice president for loss prevention with RetaiLPartners. “Front- and back-office procedures such as register polling schedules, receipt checking procedures at doorways and returns management processes all should be evaluated prior to deployment.”

Noting that fraudulently returned merchandise is already a significant problem for retailers — particularly during peak holiday selling periods — Tom Rittman, vice president of marketing for The Retail Equation, says the “ease and duplicability of e-receipts” could compound the issue.

A digital receipt, Rittman says, can be transmitted to multiple mobile devices, printed on home printers and used for multiple fraudulent returns. “Now retailers can be hit with rapid and massive return fraud before having time to react,” he says. “With e-receipts, retailers are more susceptible to organized retail crime.”

Proponents of e-receipts, including environmentalists, vendors and some early-adopting retailers, tout multiple benefits for all parties involved.
“It’s all about finding ways to be more environmentally friendly and making it more convenient for shoppers,” says Liz Burkhart, a spokeswoman for Whole Foods Market.

“Retailers love digital receipts because they are environmentally friendly and provide their shoppers with added convenience, especially since mobile devices now play such a large role in the shopping experience,” says Richard Mader, who recently retired as executive director of ARTS. Mader also notes that the use of e-receipts should grow as mobile payment systems become more widely deployed. He predicts that within five years, as many as 60 percent of the country’s retailers will be issuing e-receipts.

Growing demand
Richard Feinberg, professor of consumer sciences and retailing at Purdue University, notes that there are e-receipt benefits for both consumers and retailers. “From the consumer’s point of view it’s clearly a satisfaction issue,” he says. “It’s easy, simple and good for record-keeping for those who prefer to use it.”

And even small, incremental savings add up for retailers, Feinberg says. For large chains, it’s “a penny here, a penny there, so the cost savings can be pretty significant,” he says. “Even for smaller merchants, the savings can be meaningful.”

As for loss prevention/asset protection concerns, “There hasn’t been a dark side yet,” Feinberg says. “I don’t have the statistics, but whatever they are, digital receipts are still a very small percentage of transactions. Most people still want paper receipts.” Referring to potential return fraud and shoplifting issues, he says, “We can sit here and speculate about problems, but those haven’t turned up yet.”

He suggests that among some consumer demographics, such as 18- to 30-year-olds “who are fully digitized,” there is a greater demand for e-receipts than among other age groups; as a result, the demand for them is likely to grow, even though “I doubt many over-55s ask for e-receipts,” he says.

Referencing Walmart’s recently announced test of “scan and go” technology, Feinberg says, “We will know the world has changed when Walmart does it.”

In addition to Apple and Whole Foods Market, retailers that are offering or have tested e-receipts include Gap Inc.’s family of stores — Gap, Banana Republic and Old Navy — as well as Macy’s, Urban Outfitters, Anthropologie, Patagonia, Nordstrom, Sears and Kmart.

Among retailers with mobile checkout capabilities are Starbucks, Nordstrom and J.C. Penney, which is gearing up for a rollout next year.

Finish Line and Saks Fifth Avenue stores offer roving mobile payment checkout that employs mobile printers so that paper receipts are available.

Best Buy still issues paper receipts, but has stopped asking exiting customers to produce receipts at the door. “It’s evidence of us listening to our customers, who told us that they don’t like having their receipts checked,” says Kelly Groehler, a Best Buy spokeswoman. “We removed a pain point they didn’t like.” The move allowed the retailer to reassign an estimated 2,000 associates from door security to other jobs.