Case Study: Cumberland Farms Partners With PayPal on Mobile App

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CFAs a convenience retailer with nearly 600 locations in 11 states, Cumberland Farms is always on the lookout for ways to streamline the purchasing process. In April 2012, the company teamed up with PayPal to launch a mobile payment application, which allows customers to pay for gas through their smartphones. In the 11 months since Cumberland’s SmartPay app debuted, repeat usage statistics have been in the 88th percentile, a metric that senior brand strategy manager Kate Ngo says shows how convenient a mobile payment platform can be.

What issues were you trying to address by creating a mobile payment application?
At Cumberland Farms, it’s always about delivering a convenient experience to the consumer. So for us, it’s all about making sure that we’re providing relevant solutions. We know that our customers are becoming increasingly mobile — not just our customers, but people in general. This is just another way to enhance that experience. [Once] we identified the technology, we decided to run with it.

Can you walk me through how the SmartPay app works for consumers?
The first step from the consumer’s perspective is enrolling in the program. Before the app works, we need to have access to a payment mechanism, so that’s either through your PayPal account or your checking account. [Then] you would download the app, [and] you would sign-in and verify your identity with us. You sign up with your email, and then [get] a user-generated PIN number, and that allows us to identify who you are and it allows us to secure the transaction.

When you launch the app, it actually locates where you are based on the GPS functionality on your phone. Typically the app would automatically populate your location. When I say typically, it’s just a matter of how strong the network is in the area. Most of the time it is strong enough, and it will know exactly where you are. The only thing the user needs to do is enter the pump number. Once the user enters the pump number, the app authorizes the pump and at that point, it will award you a discount of 10 cents on the gallon. From there, you continue as if it was a regular fuel transaction.

What is the nature of the PayPal collaboration?
It was a way to establish ourselves with a widely recognized brand. We’re not a payment processor by any means, nor do we claim to be. By partnering with PayPal, it was a good way for us to align ourselves with a well-recognized payment brand. For them it worked out because everyone is trying to get into this, at least from their perspective, and they wanted to partner with a brick-and-mortar. It was a win/win for both of us.

Have you have had any pushback from people who are skeptical about linking their checking accounts to a mobile app?
No. We thought we might have some pushback because checking is not a very popular way to pay. Most people are comfortable paying with a credit card. We knew that would be an obstacle, but with the 10-cent discount [per gallon], it’s really easy to convince someone to go through a different payment method.

So what challenges have there been in terms of getting the program up and running?
We actually have too many enrollments right now. We didn’t staff enough people at our call center to deal with the enrollment questions. Right now we have plenty of enrollments, but with that comes a lot of questions. So, we just ask that anyone who’s calling the hotline [is] patient with us while we get that staffed up and ready to roll.

What was the reason behind developing your own app versus partnering with an existing mobile payment platform?
The mobile payment space is pretty new. We don’t know if there’s a dominant player in the market. I think for us, because it’s such an unknown, we’d rather be able to control that experience. We wanted to make sure it was secure. We wanted to make sure that we could customize it and make it a part of the overall Cumberland Farms experience.

Now that you have the app completely rolled out, what’s the next step?
We’d like to continue to add payment options. We look at [SmartPay] as an umbrella program, where you have PayPal as an option, you’ve got checking as an option. We want to continue to look at different payment scenarios and what other people are doing and how they are paying, and be able to continually make this a good experience. We never want to force anyone to pay a certain way. We want to incorporate it into the lives of our customers.

I would say the second thing is really helping drive awareness to some of our promotions. The cool thing about this application is you can actually use it to pay for items in the store. We hope that including more content in the app will make it more informative and make it more relevant. By doing that, we’ll be able to offer exclusive deals and promotions to people who are loyal to the program.

Will you eventually be able to push deals to users’ phones?
I think that’s a technical piece that we’d like to think about as the next step. How do we design that so we’re talking to the right customer? We [want to give] them relevant information, versus just advertising. I guess [the promotions] would be emailed, [but] we’d prefer if [they were] on the app because that makes it easier to use.

Stephanie Miles is an associate editor at Street Fight. This interview has been edited for length and clarity.

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Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.