The Gimlet Eye: Glimmers of Hope for In-Store Mobile Payments

The early fall has brought some encouraging news for those in the e-payments business who despaired of ever seeing widescale merchant adoption of mobile payments in brick-and-mortar outlets. Interestingly, none of the news has to do with near-field communication (NFC), the short-range contactless technology that, five years ago, everyone thought would enable consumers to make in-store payments.

First came news of the harnessing of Bluetooth Low Energy to communicate with consumers’ mobile devices as they enter and walk around inside a store. Both PayPal Inc. and Apple Inc. have incorporated BLE in products with very similar names, Beacon and iBeacon, respectively. Plugging one of these devices into a wall socket lets a merchant detect a user carrying a mobile device with an app that works with BLE. The customer must also have Bluetooth turned on.

With PayPal, the key is that the customer doesn’t have to do anything to pay. Once Beacon detects his device, the user is prompted to check in, and his name and photo appear on the cashier’s terminal. Later, when the transaction is rung up, PayPal handles payment in the background. With Apple, which has incorporated iBeacon into the new iOS 7 software it introduced in September, merchants can detect apps that respond to BLE and send promotions or other messages as customers wander in.

Later came word that the three biggest card networks are ready to collaborate on a standard for tokenization technology to protect transactions on mobile devices and on desktop machines (for more on this, see Trends & Tactics in this issue). Assuming Visa Inc., MasterCard Inc., and American Express Co. can pull this off, the effort should go far toward thwarting hackers while mobile volumes are still relatively low. A similar effort at The Clearing House in New York City is already under way, and officials there say they stand ready to work with the card systems.

Finally, it emerged that the Subway sandwich chain, with more than 26,000 stores in the United States, has agreed to deploy a mobile wallet that will let customers pay with any card brand it accepts at any U.S. store. It’s a big undertaking, and the company is tightlipped about details, but when this deployment rolls out it will be a big breakthrough for in-store mobile payments as well as for the startup behind the technology, Wellesley, Mass.-based Paydiant Inc. (again, see Trends & Tactics).

All this with no NFC (Paydiant’s wallet relies on QR codes to trigger transactions). It could be a sign that the era of waiting for NFC is over as major players—finally—take mobile matters into their own hands.

John Stewart, Editor

john@digitaltransactions.net