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Paper or email? Pros, cons of digital receipts

Jan. 23, 2014 at 1:44 PM ET

Sample Receipt
TransactionTree
This sample of a digital receipt shows the enormous marketing opportunities available to retailers when customers choose the electronic delivery option instead of paper.

Paper receipts have served us well — they’re simple and practical. But in this digital world, that little scrap of paper is headed toward extinction.

E-receipts are often promoted as a way to save paper — and that’s certainly true. They’re also convenient — easy to file and easy to find if you want to return an item, make a warranty claim or need a receipt for tax or business purposes.

But let’s be honest, there’s something more going on here.

Merchants see digital receipts as a way to “engage” with their customers. Translation: They see this as a new marketing channel — an efficient way to sell you more stuff.

“Collecting customer data is always a challenge, even at the register,” said Ian Goldman, CEO of Celerant Technology Corp. “There are all kinds of issues about getting an effective customer list and emailing receipts is a fairly effective and simple way to get accurate contact points for your customer base.”

Armed with your email address, a retailer can try to up-sell or cross-sell you with personalized sales incentives.

According to a 2012 report from Epsilon International, 83 percent of the retailers that offered electronic receipts did so to acquire customers’ email addresses. The report says electronic receipts have proven to be “an innovative communications vehicle for retailers that offer limitless marketing possibilities.”

The Epsilon report also noted that digital receipts “offer retailers deeper insight into consumer shopping habits, which can lead to more targeted advertising mailers, promotions, and emails.”

Jason Shapiro, CEO of TransactionTree, a company that specializes in digital receipts, warns retailers that using email addresses for intrusive marketing could backfire.

The TransactionTree electronic receipt system does not add email addresses provided for e-receipts to the retailer’s marketing database. A customer must opt-in for that to happen.

“We are extremely against the assumption that the customer who wants an e-receipt also wants additional marketing,” Shapiro said. “You already have the opportunity to deliver personal marketing messages to them on that digital receipt, but that does not give you permission to start blanket marketing to them.”

Shapiro said this no-spam policy makes customers more likely to say “yes” when asked if they’d like their receipt emailed to them.

Old habits are hard to change
Apple was the first to offer a digital receipt back in 2005. Today, it’s an option at stores all across the country. Rental car companies and hotels also offer electronic receipts to speed you on your way.

But are customers choosing the non-paper option?

“Nationwide, it’s still a tiny fraction of the receipts given out at brick-and-mortar stores,” said Jack Gold, president of the research firm J. Gold Associates. “Retailers have to tread carefully. They want to move to this new technology, but they can’t move until their customer base is ready.”

A lot of this is also generational. Young shoppers feel comfortable getting things electronically, but many older people still want to walk out of the store with a paper receipt in their hands.

Gold expects digital receipts to be much more rapidly accepted in large metropolitan areas on both coasts and then spread to smaller cities and towns.

“The market is not going to change in one fell swoop,” he told me. “People who think we’re magically going to switch over to all digital receipts in the next two or three years are wrong.”

And what about privacy concerns?
Paul Stephens, director of policy and advocacy at the nonprofit Privacy Rights Clearinghouse, wants you to stop and think before you voluntarily give up another piece of personal information.

“If you’re offered that option, don’t accept it,” Stephens said. “You’re giving up information that can be hacked, as we saw in the Target breach. The more information a retailer has on you, the more information a hacker can get a hold of if they breach the system.”

Criminals can use those stolen email addresses to develop phishing attacks specifically targeted at the store’s customers. It’s called spear phishing and it’s a much more effective way to disguise spam and trick people into responding.

“You are much more likely to believe that bogus email is legitimate,” Stephens said. “The odds that you will respond and give out private information increase exponentially.”

Into the future
Despite the concerns and potential downsides, digital receipts are the future. So how do you deal with it? 

Consumer advocates recommend setting up a separate email account that you only use for your e-receipts.

“That way, you can track them more easily and they won’t get mixed up with all of your other email,” explained Katherine Hutt, director of communications and media relations for the Council of Better Business Bureaus. “You can also see if a company is being over-aggressive with their marketing to you.”

Remember, because digital receipts are emailed, they can get caught by spam filters or be sent to the wrong person, if the clerk types in the wrong email address. That’s why the BBB suggests checking your smartphone — while you’re at the register — to make sure you received that e-receipt. If not, ask for an old-fashioned paper one.

Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.

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