Not much gets retailers more excited than making it easy for customers to pay. The more barriers store owners can remove from the payment process, the fewer reasons customers have to re-think their purchase—and the better they enjoy the shopping experience.
So it’s no surprise that a number of large companies are interested in owning the mobile payments space. But right now, it looks as though Apple has an advantage with its Passbook app (included with every iPhone) and iBeacon technology.
By setting up one or two iBeacons at the check-out area, retailers can enable mobile payments for smartphone users, provided they have a bar code scanner. As the customer walks up the register, the device recognizes the beacon’s identity and presents a message regarding payment to the customer’s lock screen. Payment takes place via an electronic pass stored in Passbook that’s connected to the customer’s credit card, debit card or store credit card. The cashier then scans the barcode on the phone’s screen to accept payment.
Transactions like these are known as frictionless because the customer never takes out his/her wallet. In a recent article talking about Apple’s strength in the mobile payment market (it has 800 million iTunes accounts, most of them with credit cards attached), iBeacon.com Insider said, “iBeacon will be the lubricant for any friction-less payments system.”
There are several reasons that iBeacons are the right technology to enable mobile payments:
1. Nearly 40% of US smartphones run on iOS. In contrast, Google’s Android platform is fragmented among hardware companies (with 26% of the market, Samsung is Apple’s biggest competitor in smartphone hardware).
2. iBeacons are a one-stop shop for retailers. With a set of beacons deployed around the store, they can enable mobile payments, help shoppers find what they’re looking for, broadcast product specials, promote new products and send personalized coupons.
3. Apple has introduced Touch ID fingerprint sensors on the latest iPhones, addressing security concerns around payments.
4. iBeacons are personal—set up properly, they broadcast a message to the right shopper at the right time. (“Good afternoon, Mary, and welcome to Sports R Us. The bike helmet you recently looked at online is one aisle over, in the middle of aisle 2. Because you’re a valued customer, we’re pleased to take 10% off your entire purchase today.”)
5. iBeacons allow retailers to connect mobile payments with loyalty programs, taking rewards out of the paper-punch era and into programs greatly valued by customers. All rewards and discounts are stored on their phones, making them simple to track and use.
How quickly retailers and customers will adopt and adapt to mobile payments remains to be seen, but we think it’ll be fairly quick, and we’ll definitely be watching this space with interest.