Contactless taps new markets
It’s faster than cash, so what’s taking contactless so long to become a mainstream payment method in the United States? Most payments industry analysts agree that contactless technology, which is easy to implement and popular worldwide, may take longer to be fully embraced by U.S. merchants and consumers.
Thanks to the efforts of card brands and their technology partners, we’ve graduated from early pilots and processor certifications to an affordable family of contactless-ready terminals and peripheral readers. Consumers can confidently tap or wave credit cards, key fobs and assorted devices in lanes and counters across the country.
Slow start for fast payments
So why aren’t more people doing it? It’s taking time for consumers to notice the contactless cards on their key chains and in their wallets and understand the benefits of using this alternative payment method. Retailers have been cautious about adopting contactless technology, too. Best Buy Co. Inc. mandated only PIN-based contactless transactions, leading to the discontinuance of Visa Inc.’s payWave at its stores. Most contactless cards are dual-purpose, supporting both contactless and mag stripe, so currently Visa cards can be swiped, but not waved at Best Buy.
Also, unlike markets in Asia and Europe, where contactless payments are popular, the infrastructure in the United States has dampened contactless adoption because it is built more on mag stripe reader technology than on smart card and microprocessor technology.
Contactless taking hold
The rollout may be slow, but there are signs the U.S. market is ripe for contactless payments. Beyond the faster transaction times, there’s more security and control with contactless payments, because the card, key fob or smart phone used at the POS never leaves consumers’ hands. Contactless is also a more fraud-proof technology: the microprocessor used in contactless payments is harder to hack into than traditional mag stripe schemes. Contactless payments can also be paired with gift, frequency and loyalty programs to create rewards and incentives.
Additionally, along with the success of pilots of Visa’s payWave, MasterCard Worldwide’s PayPass, American Express Co.’s ExpressPay and Discover Financial Service’s Zip, there are ongoing systems integration efforts at the host, carrier and gateway level that will seamlessly fold these and other emerging technologies into a congruent, commercial processing framework. Here are additional indications that contactless acceptance in the United States is catching on:
* Our increasing mobility: The primary game changer will probably be the push to pay by mobile phone. Europe, Southeast Asia and other regions have seamlessly incorporated mobile phone payment transactions into legacy processing infrastructures.
* Killer form factor: Earlier entries, such as the key fob or the credit card with embedded chip, were cool but got lost in the shuffle. We’re running out of room on the key ring and in the wallet. So many plastic products compete for our attention that it’s easy to forget which ones have embedded chips that can be tapped or waved. In contrast, we have only one or two mobile phones. The tipping point will occur when more people realize they can leave their wallets at home.
* There’s an app for that: As we depend more on mobility and connectedness, our mobile devices have become much more than phones. They are compasses that navigate the changing landscape of interconnected mobile enterprises. Our always-on digital assistants help us stay connected through email, social media, geolocation and mobile networks with ever-increasing voice and data capacities. Adding payments to the mix is a no-brainer.
* Enhanced security and privacy: When a mobile phone is used as a contactless payments device, it automatically becomes more secure. The microprocessor contains an identifier that’s linked to sensitive cardholder data, but the details and bank information registered to the device are stored remotely. Transactions are more secure and compliant with most Payment Card Industry Data Security Standard requirements.
* Easy to sell and install: Selling and supporting smart phone transactions is relatively easy. Many countertop terminals and customer-facing devices are already contactless-enabled. Peripheral contactless readers can be added to late-model hardware and virtual processing systems. The function is included in most processing software, requiring only a partial download or parameter change and no heavy investment in equipment or training.
* Continuing contactless initiatives: A pilot program, code name Mercury, involving AT&T Inc., Verizon Wireless Inc., Barclays Bank PLC, and Discover will test smart phones equipped with contactless microprocessing chips at POS readers in select markets in 2011. Consumers will be able to wave or tap their phones to initiate payments. And, in a pilot in the New York City subway system, MasterCard and Visa are testing contactless MetroCards that can be waved instead of swiped at turnstiles.
A trend to watch
Contactless initiatives, the relentless efforts of manufacturers of contactless chips and readers, and the increasing adoption of mobile technology will continue to drive mass acceptance of contactless technology.
The growing contactless trend promises increased adoption of all forms of contactless payments as consumers and merchants become more comfortable with tapping and waving. We’re even seeing contactless options at self-attended venues such as pay-at-the-pump, quick-service restaurants and vending machines. So stay alert; you don’t want to miss this important new wave.
Originally appeared in The Green Sheet, Issue 10:09:02, November 22, 2010.
©Dale S. Laszig, Castles Technology Co., Ltd.
Please include this copyright notice when reprinting this article, and link back to this site when reprinting or quoting.
Ripples on the mobile Web
By Dale S. Laszig
Castles Technology Co. Ltd.
There’s a theorem in quantum physics that the observer affects the observed. That’s certainly true for the mobile Web, a shape-shifting phenomenon that’s changing our world. Each end user has a ripple effect on the mobile Internet and its always-on, always-connected community. Even die-hard laggards have been dragged into the mobile age, in which access to friends, colleagues, e-mail, Internet search and social networking is only a click away.
The next big thing for merchant level salespeople (MLSs) is to start viewing the mobile Web as a profit center. Following are 10 top trends in mobile computing that can help merchants create unique mobility strategies to stay connected with customers.
1. Mobile commerce
Rising popularity and falling prices are helping mobile payments go mainstream. Merchants can choose to process payments on portable credit card terminals, smart phones or laptops paired with card reader peripherals that communicate via cellular networks or Wi-Fi. Even brick-and-mortar merchants occasionally travel or attend tradeshows. These portable and cost-effective solutions can be taken along on business trips to securely manage cardholder data, expedite settlement and deliver lower card-present discount rates.
2. Micropayments
The ability to transfer money and make payments from mobile devices offers hope to a global population of unbanked and underbanked consumers. The Bill and Melinda Gates Foundation committed $12.5 million to fund mobile banking in the developing world. The Financial Services for the Poor Initiative is a far-reaching plan to make microfinance and savings accounts widely available, and a call-to-action for payments industry professionals.
“We believe this is a historic opportunity to make financial services accessible to billions of people in the developing world,” the foundation’s Web site states. “New technologies and innovative partnerships make it possible to create a ‘next-generation’ banking system. Working together with banks, governments, mobile phone companies, retail store chains, and others, we believe it is possible to deliver quality savings accounts and other financial services to the doorsteps of the poor.” (Visit www.gatesfoundation.org for more details.)
3. Mobile CRM
Customer relationship management (CRM) began years ago when companies attempted to understand customer buying habits and preferences. Today’s CRM is a nuanced and interactive relationship, controlled more by consumers than the businesses they patronize. These days an opt-in message on a mobile phone can lead to an impulse buy, and customized alerts keep consumers aware of bank balances and sales.
4. The mobile Web
Just as films are restructured for DVDs, corporate Web sites are provisioned for the mobile Web, with automatic mobile versions that can be read on a number of hardware platforms, including the Research in Motion BlackBerry, Google Inc. Android and Apple Inc. iPhone product lines. Mobile Web sites need to be clear, attractive and easy to navigate on small screens.
5. SMS marketing
An increase in unlimited text plans offered by wireless carriers has accelerated short message service (SMS) usage, not just by teenagers but across the entire demographic spectrum. Businesses have found innovative uses for text messaging, such as over-credit-limit and payment-due alerts, event reminders, polling and opt-in messages for customers who would like to be notified about specific promotions.
Enterprise SMS solutions help businesses stay connected with their remote workers and customers through programmable, customized broadcast messages. Programs offered by third-party providers enable administrators to download entire databases into smart phones, forward responses to e-mail addresses, and use additional tools to manage data and trend analysis.
6. E-mail marketing
Now that we’re using our phones to check e-mail, doesn’t it make sense for companies to increase the frequency and variety of targeted e-mail promotions? It’s a great way to stay in front of customers while continuing to build brand value. E-mail is less invasive than telemarketing. It also has a better chance of reaching its target audience by virtue of reaching consumers however they happen to be logged on, whether via smart phones or desktop or laptop computers.
7. Mobile coupons
Coupons are hot again, thanks to the recession. Books on how to leverage coupons are making best-seller lists, and we’re seeing increased usage across the board. The latest trends are opt-in coupons with instant savings and rebates, and rich media coupons on smart phones with bar codes read by POS scanners. Merchants like mobile coupons because they can be tracked, making it easier to analyze the success of promotions.
8. Mobile social media
The increasing popularity of social networks in all sectors is driving demand for mobile access. Facebook, MocoSpace and foursquare lead the pack in mobile social media applications. The primary functions of social media – exchanging information, sharing content, forwarding links, and managing network referrals and invitations – can be easily done on mobile devices.
9. Mobile search marketing
Most major companies recognize the value of advertising on the top three search engines: Google, Yahoo and Bing. Mobile searchers usually have a greater sense of urgency than their stationary online counterparts, presumably due to an immediate need for the product or service they seek.
Advanced forms of mobile search utilize global positioning satellite technology to offer proximity-based search results.
10. Mobile video and event programming
Remember the Sony Watchman? A tiny handheld portable television set enabled viewers to watch TV from anywhere. Advanced Internet technology has given us so many more sources of on-the-go video content. Consumers can create and send their own mobile videos, contributing content to a broad range of media, including network news.
Mobile video technology is emerging. Expect to see more variety and quality as videos are specifically designed for viewing on smaller screens. Advertising is a natural add-on in this space, as retailers compete to promote and sponsor a range of local, national, free and pay-per-view events.
Connecting in real-time is the defining element of today’s consumer-centric environment. Web sites alone will not do the job. It’s time for MLSs to join the expanding mobile Web community and turn some of those ripples into waves.
Originally appeared in The Green Sheet, Issue 10:03:02, March 22, 2010.
© Dale S. Laszig, Castles Technology Co., Ltd.
Please include this copyright notice when reprinting this article, and link back to this site when reprinting or quoting.
POS Unplugged
By Dale S. Laszig
Castles Technology Co. Ltd.
emember the early days of relationship marketing? Our job back then, as merchant level salespeople (MLSs), was to show merchants how to optimize customer-facing POS solutions, from PIN pads with basic black and white monitors to full-color signature capture touch screens.
Add a video or coupon to the monitor, we advised them. Leverage your customer relationship management database by offering discounts to your customers on their favorite items. It’s about building relationships. Today, merchants and customers have taken relationships to a whole new level. They follow each other on Twitter and “friend” each other on Facebook. We’d insult their intelligence if we suggested they become better acquainted. They’re not dating anymore; they’re married. In a post-analog world, a merchant’s traditional media mix is getting a makeover via mobile commerce, social networking, blogs and chat rooms, online ordering, and in-store digital content environments. MLSs need a high-level understanding of these applications, so we can partner with merchants who are looking for ways to seamlessly integrate payment processing across an enterprise. Merchants need to connect with their customers anytime, anywhere and on any device.
Anytime
Virtualization is a driving force in the new POS landscape, forever changing traditional concepts of time and place. In an always-on, always-connected merchant/customer relationship, leveraging five seconds at a checkout counter is no longer mission-critical.
It still makes sense for merchants to offer instant coupons, but if their customers don’t seize the PIN pad moment, they can always opt-in later, with an online order, text or e-mail.
The on-demand component of the digital age has freed consumers from the constraints of scheduled programming. Television shows can be recorded by DVRs, to be screened at the viewer’s convenience, commercial free. Meetings and tutorials can be posted online, to accommodate busy and changing work schedules.
In Always On: Advertising, Marketing, and Media in an Era of Consumer Control, authors Christopher Vollmer and Geoffrey Precourt of Booz Allen Hamilton Inc. address the new consumer-centric playing field, which has made it necessary for merchants and advertisers to personalize their overtures to target audiences. Market research has been replaced by one-on-one, interactive communication.
They wrote, “In an always-on world in which media usage is migrating to digital, advertising can be blocked or skipped, and content can be consumed on demand, marketers have to find new ways to distinguish between those aspects of consumer behavior that will remain the same and those that will change. Many are turning to direct observation of and contact with consumers.”
For more information about the book, visit http://books.google.com/books?id=GV5EomJuc68C&printsec=frontcover&dq=Always+On+by+Precourt&source.
Any device
Interaction isn’t limited to the cash register or credit card terminal anymore, or even the brick-and-mortar store. It happens everywhere we go, through laptop and smart phone browsers that keep us connected to friends, families, employers and suppliers. It’s hard to imagine life without the mobile Web now that it has become so embedded in our collective consciousness.
Internet access, once considered the exclusive province of computers, has gone unplugged. According to Dmitriy Lerman, Director of Marketing at Charge Anywhere LLC, “Smart phones are replacing computers in our everyday lives. Simple tasks like writing an e-mail, reading an attachment, staying in touch with people, getting informed on news and weather, and organizing one’s day have comfortably fallen into the realm of a phone, no longer a computer. Payments are not immune to this paradigm shift.”
Today’s merchants have more choice in POS hardware. Credit and debit cards can be swiped on portable and countertop terminals or on card reader peripherals paired with laptops and smart phones. Secure encrypted cardholder data can be managed by payment gateways.
A major component in the payment value chain, gateways optimize the Payment Card Industry Data Security Standard, increase transaction visibility through secure Web portals and empower business owners with real-time access to transaction data from broad populations of devices. They offer reporting tools to manage that data and the ability to react quickly to questionable transactions and communications failures. For a list of validated payment applications, visit www.pcisecuritystandards.org.
Anyone
We’re living in an age of one-hour sales and text messaging from banks on available lines of credit. POS technology has expanded in scope, beyond countertop devices and customer-facing screens, to a multidimensional, interactive consumer environment. This environment is more conversation than transaction. What does that mean, exactly?
Consider how frequently you receive an e-mail after making a purchase, inviting you to write a review. The company would like to know more about you and your preferences and will post your comments, good or bad, on its Web site, to be shared with other prospective buyers. Or how about the e-mails you receive from manufacturers and credit card issuers, inviting you to join online communities where members can exchange ideas and information?
It’s all part of the new online experience. Anyone can host a Web site, post a real-time video, write a blog and participate in live chat. The media is watching us. Every day, ordinary citizens are pulled from obscurity and elevated onto the world stage. Newly minted celebrities who surpass 1 million hits on YouTube are approached by advertisers who pay to post banner ads and product placements on their sites to be proudly displayed on millions of tiny screens.
While the monetization of social networks and YouTube is being debated, it’s clear that the ever-broadening online marketplace will need fast, secure and reliable methods to process payments, because there’s no place for hard cash in the virtual world.
In my next article, I’ll take a closer look at some cool, new applications that leverage mobile technology, enrich electronic transactions, and deepen the relationship between merchants and consumers. The mobile Web is the next frontier of payment processing and an opportunity for MLSs to demonstrate knowledge and leadership. To paraphrase Visa Inc., it’s everywhere we want to be.
Originally appeared in The Green Sheet Issue 10:02:02, February 22, 2010
©2010 Dale S. Laszig, Castles Technology Co., Ltd. Please include this copyright notice when reprinting this article. Please link back to this site when reprinting or quoting.
