By Randy Smith, Mobile Wallet Media
Monday, August 27th, 2012
This is week 5 of a 7-Week Series: The 7 S's Required for Success in Mobile Payments
Let The Games Begin!
Time is money in business and retail and possibly even more so with Mobile Wallets. The wallets that will make the biggest impact will be the one's with the most transaction SPEED at Point of Sale and most easily and seamlessly integrated with POS.
During and since the London Olympics, a fast and furious slate of news about Mobile Wallets strolled across our screens seemingly every other day. With all the pomp and positioning on par with the actual Olympics, I believe the 'Opening Ceremony for the Mobile Wallet Olympics' has officially taken place. But rather than just two weeks of competition, the 'Mobile Wallet Olympics' will play out over the next 2-4 years.
The race for victory in mobile payments is much like the actual Olympics. In the actual Olympics there are a multitude of athletes, events and countries with clear-cut favorites and the underdogs, of which we love to see both win medals. With the Mobile Wallet Olympics, rather than people and countries competing for medals, there are products and companies competing for market share vs. medals. The top 3 companies that end up on the medal stand will garner most of the money and market share, but like those that make it to the finals in the actual Olympics, there will be victory and rewards to share in as well. And of course there will be many companies partnered to support and give their marque product, their Mobile Wallet, the best chance for success.
In replacing our good old friend the 'Mag-Stripe Card,' mobile payments cannot be slower. At POS the NFC Tap and the 2D bar code scan appear to be the clear front runners. Either of these mobile payment methods seem to be just as fast as cards or cash.
For Mobile Wallets to succeed they need SPEED of adoption and integration. The more simple, more options and more reasons merchants have to adopt technology, the more likely they will do so. Be it Usain Bolt or Michael Phelps in recent Olympics or Dale Earnhardt Jr. of Nascar on the race track, less drag and better mechanics are two key differentiators that set them apart from the rest. Of course a high level of talent must serve as the foundation for success to redeem these benefits. A merchant without a 2D bar code reader rigged for coupons or payments will soon be requirements to compete in market that is getting ever faster and efficient.
For readers not akin to sports analogies, please forgive me as I am a avid sports fan and ex-athlete (football, basketball, volleyball, hockey and baseball). Hopefully it still helps with perspective and vision.
For a POS mobile payment method to become a standard, the easier and more quickly it is for merchants to integrate, may make all the difference. Right now is seems that 'NFC is the turtle and the 2D bar code is the hare' in the race for standardization, but this race will tighten as more reasons are added for merchants to adopt new NFC or 2D bar code equipped terminals.
I found a good summary article, describing 'Future-Proofing' payment terminals. This article by MerchantAccountGuide.com, quotes Mike Duffy, president of Chase Paymentech: "As emerging payment options gain adoption in the U.S., merchants are looking to make the customer check-out process as easy and safe as possible. The Future Proof terminal is a one-stop solution for merchants to keep accepting today's forms of payment and prepare for new consumer payment preferences on the horizon."
While Chase and Verifone lead the market in showcasing of 'Future-Proofed' terminals, Merchant Account Guide describes Merchant Wherehouse's terminals as follows:
"The company introduced its "agnostic" Genius platform, which can be integrated into any POS system, regardless of device or operating system. Like Verifone and Chase, Merchant Warehouse has also been throwing around the "future proof" label. And it claims that Genius can "integrate every conceivable transaction technology, payment and type and customer engagement program" -- including NFC, EMV, QR codes and mobile payments, as well as loyalty, gift and reward programs."
In my opinion the 'Four Horseman' of the Future-Proofed terminal must include the following types of readers: 1) EMV, 2) NFC, 3) 2D bar code and 4) mag-stripe. Of course 2D bar code readers are an investment ($150 - $300 each) some retail merchants have already made. It's my strong bet that many more of the Mobile Wallet apps will use, like Starbucks and LevelUp, the display of a 2D barcode to enable mobile payments. If the payment terminal has a 2D scanner, it will be able to capture the card credentials, actual or tokenized, and process the transaction with any POS system, without integration.
A 5th horse in the race for alternative payments may very well be Pay-Pal's 'In-Store Checkout's Mobile Number + PIN' solution. I know I said in my last article this solution, "as is," is not secure enough to scale without massive potential for fraud, but I think they will soon rectify this problem. When they do, this will be a very convenient and secure product.
Most POS software allows for configuration of their software to scan 2D bar codes for the purpose of payment. This is already being done with gift cards. However, is there enough value for the merchant to buy and configure their software to do as such if they have not already done so? Well, with Square and LevelUp already processing their mobile transactions as such, I think there might be. An additional question that must also be asked is:"Will there be added difficulties to connect closed loop with open loop or the proprietary Mobile Wallet platform? I believe that the 2D bar code will become a standard for processing mobile payments and that all Mobile Wallets must have a 2D bar code display option to process payments.
Future of Mobile POS
I believe 2013 is going to be a huge year of adoption of mobile POS solutions. This is due to the perfect storm of mass adoption of smartphones, payment apps and ipad mobile POS solutions that increase speed, convenience of checkout for merchants and consumers alike. Plus mobile POS checkout can also enhance margins for merchants and discounts for consumers. All the momentum in the media with major retailers like JCPenny and Starbucks making moves to fully embrace mobile POS and payments, will readily move the adoption meter to include Tier 2 and 3 stores. Don't be surprised if you see signs at the mall this Fall featuring mobile payments during our first 'Mobile Christmas.' It is prime time to be in the retail POS industry!
Merchant service providers or resellers need to provide case studies or paint the picture how employee costs may be cut by improved SPEED of order processing and checkout combined with the opportunity to "up-sell customers." I see mobile POS being used to accomplish both by extending the reach and capacity for order-taking and checkout.
In restaurants, mobile POS enables a server to add an order in seconds without duplication, delay or increased chance of errors. The time freed up for servers will enable ample time for up-selling and providing better service, thus consumers will be more satisfied and more likely to return sooner and more often. At a busy night at the bar, a "line-busting" mobile order capability could increase orders by 15-30% or more. Bottom line is adding Mobile POS technology can cut employee costs and enhance service and sales.
Merchants can effectively market these solutions by tying to loyalty and 'Offers tied to enrollment.' Smartphones and tablets are everywhere now and "Cool, Convenient and Savings" is the way to sell. The new mobile channel will move to eventually tie all campaigns under one coherent marketing umbrella. Loyalty programs tied to paper or plastic have long restricted the adoption rates of consumers. Who wants to carry around a card for every store they frequent? Merchants may empower their customers to "Go Mobile and Earn Special Rewards." Once customers are on a Mobile POS or Mobile Wallet platforms, merchants are enabled to extend personalized offers based upon past order history or proximity offers using GPS and coherently tie to all other marketing channels.
About Mobile Wallet Media
Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Award Winner.
By Randy Smith, Mobile Wallet Media
Monday, August 20th, 2012
Week 4 of 7-Week Series
The media focus seems to have been mostly on enabling technology, security and savings, but retailers need a 'Clear-Cut Vision' on how Mobile Wallets will drive more traffic to their stores.
Social will be a key driver of traffic.
Social networks provide the reach retailers are looking for, and one of them is a Droid (please tell me you got that joke referencing Star Wars - Episode 1 + Google's phone). Yes, I know if I have to explain it, it only makes it worse. Welcome to my world of humor. My friends still love me, despite this.
Social has no borders or boundaries and all channels connect to it and serve it. Social networks provide, other media channels, the ability to interact with their customers. Social also has unparalleled depth of data on it's users. Of course each channel each has it's own unique data analytics.
TV, radio and even websites can gather information about their customers to better know and serve them, but this data is limited. Social data is 'Organic Data.' Facebook 'Likes' pinpoint what each 'Social Surfer' is interested in. Try that with any other marketing channel. You want to communicate and allow for 2-way engagement with your ALL of your customers at once. Just post a poll, pic, video, promotion or contest on your Facebook page. Now, I don't want to leave out 'Social's Super Side-Kick' Twitter. One without the other is definitely less engaging in reaching your total audience. Nor should one ignore any of the other prominent Social Networks such as Youtube, FourSquare, Pinterest and Yelp.
Other media channels freely and without choice promote social networks. Why? Because in the end the 'Customer is King.' If any advertising channel wants to run on all cylinders, it has no choice but to engage social with all it's heart and might. Marketers must do it with passion and purpose or quickly be exposed or ignored as not being 'with it,' or worse becoming irrelevant.
Last week I shared that a 'Heat Seeking Missile' is required to hit our target. To make this missile fly it requires social and the right kind of social. If you ever have seen the movie October Sky, you would know that launching a rocket requires a perfect mixture of fuel. This fuel must burn smoothly and not be full of 'Hot Air Pockets' or the rocket will explode in flight. So am I saying you must be a rocket scientist to carry out social? Yes, but it will require those proficient at Social Media and communication in order to conduct reliable, safe and successful social engineering.
Placing a 'Social Badge' on ones website or ad does not make one Social. Brands must be social, like nice and extroverted people. Customers may come for your product, but will return if a relationship is built. Social Media is about relationship building and adding value to your great product or service.
In a world where customers have a multitude of choices of where they may buy a product or service, they will not as often be so stingy on price or buying elsewhere if they enjoy their shopping experience. This is a key part of brand building and being profitable and via Social, you have the opportunity to take your brand and the relationship to a deeper level. You may share about what, as a brand, you care about besides your product and services; be it saving the planet, feeding starving children or funding college scholarships. But be careful to be very proactive and collaborative with customers and non-profits to achieve the right results. The last thing you want to do is have a 'Cause Marketing' program lacking in real sincerity and purpose. People will see right through this.
In order to accomplish and carry out a successful Social Media campaign companies must hire social, friendly, fun, funny, rational, realistic, intelligent, talented, mature and very creative people that understand their product and their customer. These representatives must also care about what your customers care about and they must care about the causes you partner with. There is no going backwards here! Just like there is no reverse gear in technology, such is the case with social.
Social is most assuredly moving and trending with mobile technology. Mobile of course is changing everything as well (By the way, very soon we will examine in depth how these trends parallel). Merchants and advertisers must meet their customers where they are at and this is where social and mobile meet. If a marketing channel fails to do this, it would have been like the auto industry saying no to fuel injection or Hybrid Electric Vehicles. Social, along with mobile, are media channels that are in hyper drive and will drive growth wherever it is properly plugged into.
Speaking of 'Hyper Drives,' let's tie in social with the Mobile Wallet. Social is also one of the core suppliers of 'the gasoline' that will enable Marty and Doc's Delorean to reach 88 miles per hour. If you remember from week one, the 'Flux Capacitor' for the Mobile Wallet is the connection between mobile to POS and is what makes mobile payments possible. So if Social in the gasoline, what is the uranium to power the Flux Capacitor?
Retailers, of course, are the 'Uranium.' Without retailers participating, the mobile wallet will be stuck in neutral and really serve no purpose. But thanks to Starbucks, Dunkin Donuts, upcoming ISIS pilots and the 'new' Google Wallet, the prospects are looking good for the supply of uranium.
Social is the 'Gasoline' to drive forward mobile payments!
Retailers are the 'Uranium' that power the 'Flux Capacitor.'
Mobile Wallets provide the Flux Capacitor > POS Technology.
So, let's venture back into the 'Data Goldmine,' that the Mobile Wallet will soon be the 'Mother Load' of them all. We know that social without retail, without mobile, is a Lose-Lose-Lose proposition. And now with the addition of the mobile wallet, the data loop may be made complete, well sort of.
Up until the mobile wallet, the transaction data of customers, for all their purchases at various stores, was exclusive to networks and banks. Each retailer has exclusive SKU data and thus purchase history data, but not necessarily, if rarely ever, tied to card data. With the mobile wallet, the transaction data for all purchases is not limited to just one card brand, but will be expanded to include all payment methods; cards, ACH, gift, daily deal vouchers and virtual currency. Mobile Wallets enable customer tracking without loyalty cards. With Mobile Wallets, retailers can now track customer purchases and thus deliver personalized offers.
Also, as the wallet is paired with shopping carts, and perhaps filled with UPC codes, it could contain the entire data chain. Retailers also parse out their data archives to data aggregators in exchange for gaining even better data so as to market with more precision and better ROI. These data aggregators will also want to buy data from mobile wallets so they may complete their data chain. And last but certainly not least the product OEM's may finally be able also tie sales to individual customers, also enabling product personalized product promotions and even 'Automated Product Registration.' We'll complete this conversation in coming days or weeks in an upcoming article on data analytics and the Mobile Wallet.
So, we strayed a bi into data analytics today from the focus of Social, but that is because Social is the 'Prince of Data and Reach.' The bottom line is retailers can not afford not to embrace Social, wherever it goes. Retailers tune into, as do we all at times, WIIFM Radio: 'What's In It For Me' and tune out if the song playing on the radio is not "Show me the Customers or Money.' There is nothing wrong with this of course. Making a profit is the main goal of any business and without ample traffic coming through the doors, it will not matter if you have the best products and the coolest and most contemporary looking store in the world (well this alone could drive traffic via word of mouth - but we'll leave that to another discussion), if you have failed to build an off-ramp and display bulletin boards along the busiest digital and mobile highways and byways, your best customers will be crickets and the bill collector.
About Mobile Wallet Media
Mobile Wallet Media is a media, analyst and consulting firm focused on the future of mobile commerce. The company mission is to highlight industry innovation and provide insights and opinions that will be relevant and forward-looking. The author, Randy Smith, is the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.
By Randy Smith, Mobile Wallet Media
Wednesday, August 15h, 2012
It has always baffled me as to why retailers have not banded together to form their own mobile wallet network. The benefits are too many to not engage in doing so.
Today with the announcement of Merchant Customer Exchange (MCX), leading retailers Wal-Mart, Target, 7-11, Best Buy, CVS, Darden Restaurants and more, a much anticipated 'Retailer Mobile Wallet Network' focused on serving their customers has formed. MCX has not revealed the technology to be used to enable their mobile wallet, nor have they hinted as to when the service will be available.
In the release Mike Cook, corporate vice president and assistant treasurer at Wal-Mart said “MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders. The MCX platform will employ secure technology to deliver an efficiency-enhancing mobile solution available to all merchant categories, including retail stores, casual dining, petroleum and e-commerce.”
Over the past several years, the goal to create a standard format enabling simple, fast and secure mobile payments, via a mobile wallet, has proved to be a long and drawn out process.
NFC tech, long used in Japan for conducting mobile payments, has been the leading choice of Google Wallet, ISIS (Carrier network), Visa, MasterCard, PCI (Payment Card Industry - card data security rules) and payment terminal manufacturers such as Verifone. NFC tech has been slow to gain traction because retailers have not wanted to pay for the replacement of existing terminals, that may end up needing replacing again if they jump too early. Alternative methods have been introduced by Square and LevelUp that use scanning of 2D bar codes displayed on
mobile wallet smartphone apps.
No matter how you slice it, it seems there is always a 'chicken and egg' problem that will not go away. But now with the retailers 'flexing their mobile muscle,' it is beginning to look like there is no clear favorite to dominate as a single format (I already went over in depth in my previous article). But just like retailers must embrace Facebook, Twitter, Google+ and accept all four major payment brands, they will also need to accept other payment networks beyond their own. This is about consumer reach.
The retailers should most definitely maximize their marketing reach, but the bottom line is they still have to get their customers to return to their stores. Reaching customers through various and many marketing channels has always been a winning strategy, and nothing will change here.
In the release, Mark Williams, president of financial services at Best Buy said “As merchants, no one understands our customers’ shopping and payment experience better than we do, and we’re confident that together we can develop a technology solution that makes that experience more engaging, convenient and efficient".
A key advantage for MCX is the cost savings to deliver mobile payments, offers and loyalty through their own platform. I imagine that the retailers themselves have hired a consulting firm to work with them on this to deliver and manage the solution. If so, they will still need to 'put their pants on one leg at a time' and have to pay someone, but the costs are likely to much lower. Their are a ton of moving parts and various POS systems that need to be integrated and connected to a single platform.
I know very well this model is a very real possibility, as the company I founded, MobilePayUSA, has a 'Universal and Patent-Pending Solution' that sounds much like the MCX solution. The retail network proposed by MCX brings added disruption not only to the payments space, but also the mobile loyalty and advertising space. I am writing two series (The 7S's Required for Success in Mobile Payments and SuperCommerce) this Summer and Fall that speak directly to this upcoming disruption and merging of payments, marketing and mobile.
Mobile Wallet Media is a media, analyst and consulting firm focused on the future of mobile commerce. The company mission is to highlight industry innovation and provide insights and opinions that will be relevant and forward-looking. The author, Randy Smith, is the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.
