A few posts back, we highlighted CodeBroker’s coupon loyalty solutions technology. Codebroker’s technology enables retailers to send coupon barcodes via text to customer smartphones. The barcodes that appear on smartphone screens then may be redeemed by using special optical barcode scanner at a physical retailer site. It’s a nifty and innovative concept that is sure to take off as consumers continue to shift towards smartphones. Even yesterday, Starbucks officially launched a mobile payment application, which allows for Starbucks card codes to be scanned directly from a customers smartphones. Starbucks customers must first sign up for the program, load up credits, check balances, and check rewards. The payment application functions exactly like how a gift card would, except it removes the hassle of carrying around a card and replaces it with your phone.
Will digital payment/credit cards be the new thing?
Maybe, but not so fast. Imagine not being able to access your cards because your phone malfunctions or runs out of battery. You’ll be running around all day phoneless, with no money, and worst of all, no caramel macchiato! And let’s not even start to think about the amount of security issues that may come with the convenient technology. However, we must give Starbucks e-props on researching their target demographic. 1/3 of Starbucks customers are smartphone owners, 3/4 on Blackberry or iPhone. Customers loaded more than $1.5 billion on Starbucks cards. That could buy you a lot of lattes. Starbucks envisions that their payment application will help increase customer loyalty, increase store efficiency, and save customers time.
Paying with Your iPhone
Reports and industry experts are reporting that the next Apple iPhone will feature mobile payment capabilities, utilizing Near Field Communication technology. Near Field Communication technology allows phones to interact with other objects, such as posters, stickers, and shirts. Android currently offers this technology, but focuses more on interaction with objects, not payments. Apple would have a leg up in entering the market, because it already has payment data on millions of consumers through the Apple app store. An obstacle Apple will face is convincing thousands of merchants to upgrade their payment terminals to accept Iphone payments. Merchants are still waiting for the technology to take off with consumers before they jump in. If Apple is able to ease the transition for consumers and convince merchants, they will position themselves into being able to take a percentage of the $2.5 trillion annual credit card transactions, similar to how credit companies charge merchants per transaction.
Merchants and consumers should expect NFC services to increase and grow into the next year. Many major phone service providers are already jumping on the band wagon. What will this do for physical retail stores? Will the new convenience of shopping with smartphones rejuvenate shopping? Will it have any effect on e-commerce sales? How will credit card companies respond?
Written By: Daniel T.
