Bridging The POS GAP - Disruption is Overdue!

By Randy Smith,

Mobile Wallet Media

October 10, 2012

NFC is the Tortoise and QR/2D bar codes are the Hare, but is there a Cheetah that might chase down the Hare and further stall the Tortoise?

And in the end, who will be the Lion and King of the mobile payments?

In thinking of proper analogies regarding NFC in mobile payments and wallets, an 'Arranged Marriage' is what comes to mind. It best suites the incumbent parties (networks, banks and equipment providers) and leaves the groom (NFC-Wallets) and bride (merchants) hoping it works out well.

Why does NFC suite the incumbents so well? NFC requires a reader in the terminal and is designed work in conjunction with conventional banking and prccessing methods. As Jerry Seinfeld might say "Not that there's anything wrong with this." But as the marriage has been delayed, the bride is becoming restless and questioning if the arranged marriage will be worth it. Retailers, the bride, know what they want (MCX), but remain open to other suitors that are now wooing them away from the marriage with NFC: Pay with Square, LevelUp, PayPal, Apple (? - said no to NFC) and more! With NFC, it takes the phone and terminal to engage and so the retailers are looking at other options to fuel their desire to gain mobile payment engagement.

In relating NFC to mobile payments, the core purpose of mobile payments is enhanced convenience, speed, security and decreased costs for merchants and consumers alike. The NFC and Mobile Payments marriage may end up producing these results, but it sure seems like the marriage is traveling on a rocky road and is still yet a fragmented arrangement. A single standard has yet to emerge and merchants are wary of investing in technology that is not ubiquitous or may be 'Dinosaur Tech' in 6-18 months.

Continue to read the rest of the story.

A Square Peg in a Round Hole! Is Pay With Square Scalable?

By Randy Smith,
Mobile Wallet Media
Friday, August 24th, 2012


I love the Starbucks Card Mobile App. It is fast, simple, convenient, fun and rewarding. However, 'Pay with Square' may have a tough time scaling as fast as other Mobile Wallets, like Google, MCX and ISIS, if they fail to simplify integration at POS.

The Pay with Square Video showcases a long overdue and brilliant customer service feature, making it much easier for hospitality employees to provide 5-Star service. I spent several years in the 80's and 90's working in guest services for luxury hotels and in the restaurant industry. Therefore, I understand very much about high-end customer service in the hospitality industry. Pay with Square is great, but it may prove difficult to get their software installed quickly unto POS systems.

Pay With Square will require custom software to be loaded onto 'Locked-Down POS Terminals' and PC's or tablets, which may or may not be unlocked. Locked means the system is 'locked-down' and access to load new software is often controlled by POS Dealers, POS Network Security Firms or POS Providers themselves. Unlocked systems are open and able to download new software without working with the dealer or POS provider. Either way, the fixed systems do not like new software on their platform, much like our bodies do not like viruses or cancer.

Systems are locked down to prevent hackers or viruses from infiltrating the POS software, stealing data and corrupting the system. A 'Secure Network' is set up by merchants to protect the communications between mobile POS and fixed POS systems, as well as the back office, central network or payment processor.

Most 'Fully Integrated Systems' are locked down and many ‘Stand Alone’ PC's are also locked down. POS tablets are less likely to be locked down, unless they are issued by a POS Dealer or POS security firm to better secure the devices.

So Starbucks, Square and all merchants running their stores on Locked-Down, Fully Integrated Systems, will have potentially huge integration challenges or equipment costs to add Pay with Square. For a merchants to accept Pay with Square the merchant has the choice of using Square Register via an ipad or integrate with the merchant's current POS system.

If a merchant wants install Pay with Square on their Locked-Down, Fully-Integrated System, they will have to coordinate the unlocking of the system. Now this would get you Pay with Square, but this would be a stand alone system. Yes, this can be done, but this does not make sense as the customer or the cashier would have need to manually enter the amount due. This leaves too room for mistakes by cashier or customer and a process of closing out the transactions with their current POS system would need to be established as well. This makes no sense to do this unless they were just showcasing a proof of concept. Since Square needs a highly scalable system, this is not the solution.

However, it might make more sense if Square separates out the 'ID recogniztion' from the actual payment authorization. Or if they could authorize transactions separately from the existing POS and then merge the transaction data back in real-time ito balance and reconcile the cash register ledger.

The most likely solution for Square is to integrate fully with POS systems, like TabbedOut, Paydiant or MocaPay have already done. They would start with the system(s) Starbucks is using and try and integrate with the top 10 systems by early next year. This too, is not a straight forward process, as connecting to each POS system is a very different process.  There is another, more scalable way to do this, but I'm not at liberty to discuss publicly, as it could potentially reveal MobilePayUSA trade secrets.

Other than integrating to dozens of POS Systems, I don't see how Square will scale quickly with installing Pay with Square. This could be a very viable route if they have enough people assigned to integration. Within 3-months they could accomplish integrations, then run 3-months private pilots and be ready by Q2 of 2013 for launch of Public Beta. Many merchants have older POS systems, which they very likely would be required to replace or upgrade if they wanted to accept Pay With Square or several other mobile payments solutions. Maybe I'm wrong about all of this and Square has some unique integration method up their sleeve? But it does appear Square will still have to work within the limits of known integration methodology.

So one may ask, "Will this not lead to merchants switching over to Square Register and tablets?" Yes and no. This is a function of size and complexity of their store ordering system and size of their chain.

The larger the retail chain, the less likely they will want to swap out their current system to Square Register. It will be really hard to convince major retailers to change out their entire systems just to accept Pay with Square! We've already seen that most major merchants dragged their feet to pay for terminals with NFC. POS registers cost up to $3500 each, the POS software they run is most likely already works great and is secure.

Retailers would only want to adopt Square if they had simple ordering needs at POS, like a coffee or sandwich shop, and they were unhappy enough with their current system. It makes complete sense for new merchants with simple software needs, as the cost to get up and running with ipads and Square Register is as much as $3,000 less per register. By the way I do think Square Register has a huge potential merchant base, merchant's with fairly simple software needs, but it will have a tough time convincing 'Top Tier Retailers' to rely on Square as the platform to run their stores.

Unless a merchant is committed to being an innovator, like Starbucks, Square will truly a 'Square Peg in a Round Hole' and is not likely as scalable as NFC or QR code generation and scan like Starbucks Card Mobile. If Square sticks to Starbucks Card Mobile model and ditches or keeps their very cool, customer service tool separate from payment, they may scale at a pace equal to many current competitors.




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.

LEADING RETAILERS FORM MERCHANT CUSTOMER EXCHANGE TO DELIVER MOBILE WALLET

Press Release issued by MCX

MCX boasts unmatched scale and consumer insights for developing a mobile-commerce solution
DALLAS (August 15, 2012) – A group of the nation’s leading merchants announced today that it has
formed Merchant Customer Exchange (MCX), a new company dedicated to offering consumers a versatile
mobile-commerce experience that will combine the convenience of paying at the register with
customizable offers.

Development of MCX’s mobile application is underway. The initial focus centers on offering merchants a
mobile-commerce solution capable of seamlessly integrating a wide range of consumer offers, promotions
and retail programs. The application will be available through virtually any smartphone.
MCX includes merchants such as: 7-Eleven, Inc.; Alon Brands; Best Buy Co., Inc.; CVS/pharmacy; Darden
Restaurants; HMSHost; Hy-Vee, Inc.; Lowe’s; Publix Super Markets, Inc.; Sears Holdings; Shell Oil Products US; Sunoco, Inc.; Target Corp. and Wal-Mart Stores, Inc. Combined, these initial members serve nearly every smartphone-enabled American and account for approximately $1 trillion in annual sales. While
current MCX merchants have unmatched scale, MCX intends to address the needs of financial institutions
and merchants of all sizes to better serve consumers in the growing mobile marketplace.

“MCX will leverage mobile technology to give consumers a faster and more convenient shopping
experience while eliminating unnecessary costs for all stakeholders,” said Mike Cook, corporate vice
president and assistant treasurer, Wal-Mart. “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.”

“We believe MCX is uniquely qualified to offer the most comprehensive mobile payment options for
consumers,” said Terry Scully, president of financial and retail services, Target. “By participating in MCX,
merchants are in a position to effectively deliver innovative payment approaches that aren’t available
today.”

“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,” said Mark Williams, president of financial services, Best Buy.
MCX expects to announce additional members during the coming months.

Visit MCX at http://www.mcx.com or for more information, email info@mcx.com


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.