The Green Sheet Online Edition
March 10, 2014 • Issue 14:03:01
The Mobile Buzz: BLE, Taco Bell and the mobile cornucopia
Mobile payments is a hot topic in the payments industry today. The Green Sheet asked Brent Warrington, Chief Executive Officer of Austin, Texas-based ISO SecureNet Payment Systems, to comment on the issues and challenges facing merchants and mobile payments service providers.
The Green Sheet: Describe the current state of mobile in-store payments?
Brent Warrington: Over the past few years we've seen more and more fragmentation in the payments industry. Consumer adoption of QR [quick response] codes has been weak from the onset, and retailers are a bit spooked by the high cost of NFC [near field communication]. So we're at the point where we're continuing to see more and more solutions entering the market. I expect that trend will start to turn to consolidation over the next several years.
GS: What is the state of mobile wallets as it relates to merchant adoption?
BW: For many smaller retailers, it's not practical to devote significant resources to develop a customer-facing mobile app. It's also not realistic to think the average consumer will have room for dozens of apps on their phone dedicated to paying at different retail locations.
Right now we're seeing a lot of retailers with a point-of-sale infrastructure and separate mobile and e-commerce platforms. So retailers are increasingly looking for one solution that works across those three channels and reconciles their data on the back-end.
GS: What is significant about the mobile ordering app Taco Bell expects to roll out nationally later this year?
BW: The sheer scale of the Taco Bell implementation is incredibly interesting. Companies like Taco Bell, Chipotle and others are seeing consumer smartphone adoption hit a tipping point. They also view a large-scale mobile rollout as an investment to attract millennial dollars, which has been a key concern for quick-service restaurants like McDonald's.
And if you thought ordering fast food couldn't get any faster, think again. Look for mobile ordering apps to be able to 'vault' payment information, meaning consumers will be able to store their credit card or gift card securely on the app and pay instantly without that card in-hand.
GS: What do you think of Bluetooth Low Energy (BLE) technology as a mobile payment solution?
BW: BLE is a very interesting technology with huge potential and several different possible implementations within a retailer's ecosystem. At the outset, BLE's use in beacons to provide store navigation and location sensitive coupons is making the physical stores relevant again and providing enhanced shopping experiences for the consumers.
As in the use of BLE in mobile payments solutions, there are several possibilities that will play out over the next few years, such as:
- BLE replaces NFC because of the wider penetration of technology amongst new smart phones.
- BLE makes it possible to connect to a POS terminal or a cloud-based checkout terminal, which gives consumers the freedom to pay from anywhere in the store versus at a checkout lane only. For retailers, this could possibly free up some retail real estate.
However, there will be some questions that will need to be answered before BLE truly takes off:
- Security: BLE's longer range (versus NFC's shorter range) makes transactions more vulnerable to spying, hacking and spoofing.
- The BLE-enabled transactions could be considered card-not-present (since the consumer is not physically in front of a clerk at checkout), making them more expensive for retailers.
- Last but not least, consumers are not going to adapt unless there is a significant convenience factor associated with BLE powered mobile payments.
: And what about Apple? The company seems to be taking a sort of wait-and-see approach to mobile in-store payments.
BW: Google moved first and hasn't been particularly successful. Historically, Apple doesn't jump into markets unless it can be the No. 1 or No. 2 player off the bat. With iTunes, Apple is already the king of micropayments, so it's a logical step for them to make the leap to mobile in-store commerce.
Also keep an eye out for Facebook. Their acquisition of WhatsApp has expanded their user base internationally, and similar chat apps are already being used for mobile payments in China.
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