Michael Koployof Software Advice in Austin, Texas recently posted a blog about the adoption of mobile payments by retailers.  The blog is at http://blog.softwareadvice.com/articles/retail/mobile-payments-faqs-1012512/.  In it, Michael talks about the basics, the ecosystem, and the merchant opportunity.  This is an interesting take on the subject and here are my thoughts.


Michael is correct in saying that for retailers upgrading their PoS terminals, it’s a relatively simple matter to incorporate contactless functionality.  This has already begun, especially in the fast food sector, with companies such as Subway and McDonalds adopting contactless, and seeing steadily growing transaction volumes.  The terminals are pretty much indifferent to whether what is being presented is a card or a mobile phone.


However, in my view, contactless payment on mobiles is being held up by the turf war between banks, handset manufacturers and mobile network operators.  This is severely (and, to the consumer, arbitrarily) restricting the choices available.  For instance, I have a Samsung Galaxy Nexus NFC mobile phone, which I love.  I also have a Barclaycard, and my UK MNO is O2.  Barclaycard is available on mobile in the UK – but if I want it I can only get it by switching to a Samsung Tocco handset and MNO Orange, neither of which I wish to do.  This is because of a fight to control the Secure Element within the phone.  But I don’t think many people will change their handset or mobile provider just to get a payment application.


So I think this is going to mean mobile payments are going to roll out more slowly than they could.  So what do retailers do in the meantime?  I think the answer lies in the last section of Michael’s blog.  It will lie in locating shoppers and presenting them with attractive offers – that are time, location, and consumer specific.  Mobile phones offer retailers the opportunity to learn much more about their customers – where they go, what they like, what they buy.  And social media networking has shown large numbers of phone users are only too happy to share this information.  Michael mentions some applications which retailers can use – I would also bring in Location Based Marketing schemes such as Foursquare and Facebook Places.


The beauty about these applications is that, unlike payment, they don’t require a complex infrastructure to implement.  Merchants can start small, experiment to find out what works, and expand at whatever rate they are comfortable with.  Then, when payment by mobile is finally allowed, this will naturally complement the coupon/discount applications, and deepen the relationship between the merchant and the consumer.


I’m quite sure the early adopter retailers in this space “get it”.  I think we’re witnessing a profound shift from mass advertising, relatively untargeted, towards highly personalised messaging and offers, tailored to the known preferences of customers.  Michael’s advice – to have a vision in place and stay alert – is spot on.


Fenbrook Consulting advises businesses about the commercial opportunities and technical requirements of Near Field Communications

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