The worst thing is waiting in line at Starbucks, right? Especially first thing in the morning. The line is always enormous. And there's always that guy in front of you ordering one of those complicated 800-calorie ice-cream/coffee drinks. And all you want is a quick cup. In the company's defense, it's not just Starbucks. It's the restaurant where you're waiting for your check. It's the pharmacy where you're standing in that endless line to pay for a tube of toothpaste. It's your favorite clothes store.
You will soon be able to avoid those lines. Because a few weeks ago I saw the future. And it was with a guy from PayPal. The guy is Anuj Nayal. He's their fast-talking director of global initiatives. I was in midtown New York doing an unrelated project for them and while there we talked about two major products they've launched that will impact mobile payments. PayPal is not compensating me to write this.
Actually, that's not entirely true. Anju did buy me a coffee and a blueberry muffin for my efforts. He insisted on going to a place all the way down in the Village, though. Why? To show me the future of retail. As the driver pulled away from the curb, Anuj asked me what kind of coffee I wanted. I asked for a simple, plain cup of coffee. Anuj said, "No problem," proudly pulled out his smartphone and launched PayPal's new app. And here's how it worked.
The app already had a directory of thousands of retailers who had previously signed up for the service. One of those who signed up was a little coffee shop near Washington Square. He chose two cups of coffee from the menu and a couple of blueberry muffins. Then he paid for it. On his phone. From the car. How? He had set up his PayPal account to access money from his bank account (or credit card). With the initial setup done, there was no more need for any more cards or cash. Going forward, all he needed was his phone. And when we arrived at the coffee shop, our two coffees and blueberry muffins were waiting for us to be picked up. And we didn't have to wait in line!
And neither will you, anymore. Because the next generation of mobile payment applications are upon us.
Google has been struggling with its "Wallet" product, which uses Near Field Communication technology to let consumers "tap" their phones to pay. But it has not been catching on. There have been many reasons given. In my opinion, it's not just the technology. It's because one big thing is missing: We still have to wait in line!
The next generation of mobile payment applications will eliminate some people from the process, as well as the plastic credit cards that we are forced to carry. This is one step toward eliminating our wallets altogether. These applications will save us time. They are getting the sales clerks, waitresses, ticket-sellers and baristas out of our way. And they are making the really good sales people even better -- getting them out from behind the cash register and on the shop floor where they belong, assisting customers and taking orders. And in the process they are making retailers and other consumer-driven businesses more profitable. They are reducing overhead and cutting payroll. And it's all happening right now.
PayPal will have plenty of competition. Banks and credit card processing companies are developing similar technologies. Square and other mobile payment software developers are creating competing products. Ziosk and similar point-of-sale vendors are attaching tablets to restaurant tables across the country.
All of these applications are slowly, but enormously, changing retail as we know it. Because now we can place our order and pay for it without ever speaking to a human being. We can buy things in advance and pick them up later. The retailer can offer coupons for special items and frequent customers. They can collect (with permission) customer data for future marketing and communications. There's the mobile app. But there's something else happening on your phone. It's called BLE, or Bluetooth Low Energy. What's that? As you enter one of your favorite stores, a very low-energy Bluetooth "beacon" signal emanating from your phone alerts the store's point-of-sale system that you're there. BLE is now standard issue on the new iPhone and many Android devices.
How does this change your life? You choose and swipe a product's bar code. Or the items already have embedded Radio Frequency ID chips that are readily scanned. When you go to check out, the clerk already has your photo and payment information sent to them by BLE. The clerk gets a verbal confirmation from you or asks for a fingerprint, and from this ID-check you're authorized and a payment is made from your phone. Your phone never left your pocket. You have no credit cards. You've already told the app which stores are allowed to "check in" with you.
This is reality today. The just-released PayPal Beacon uses BLE and already works with many major POS systems. The retailer only needs to purchase an inexpensive plug-in device that will sense the BLE signal. PayPal is also offering a programming interface for developers to create more customized in-store solutions. The company is piloting this product in the fourth quarter of this year and plans a full rollout in 2014. And keep an eye out for Apple because they've got their own BLE service called iBeacon and it's included on the newly released iOS 7 operating system.
This is important stuff for your clients in the retail business. And especially if they're small retailers. They are looking for better ways to make their customers happy. They want to provide the highest level of service at the lowest cost possible. They want their customers to enjoy doing business with them because not only are their products great, but they're efficient and fast. They want to stand out from their competition and offer a better all-around experience. They want an easy way to offer promotions for drawing in new buyers. Will the transaction fees that PayPal, Square, Apple or other leading mobile payment application providers charge be worth all of this?
I hate carrying around a wallet. I hate fumbling with my credit cards. I hate waiting to pay my check at a busy restaurant. But most of all, I hate standing in line Starbucks. So it's worth it to me.
Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsized businesses. Besides Accounting Today, he writes for Forbes, The New York Times and Inc.com.
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