by Tim Attinger
Point of Transaction 301 (elective. PoT 201 and Cloud Payments 210 prerequisites): The Network is the Terminal
Lesson 3 Discussion Board: What do you think would be the biggest challenge in getting consumers to start using their online checkout identities, or registered aliases, for purchases at the physical point of sale? Click here to respond.
Let’s start our last class this week right from where we left off yesterday. Painting a hypothetical picture, let’s go back to that Apple retail store as a potential example for the retail store of the future. Today, you might walk into an Apple store to buy an iPad for that special someone who really wants to read books and surf the Web from the sofa. A friendly, helpful person greets you at the door, ascertains your interest, makes a few product recommendations, walks you over to the display table for a demonstration, helps you make a choice, goes in the back to grab a box, and then meets you back out on the floor. What happens next is potentially transformational for the retail point of sale, but it may be so subtle that you miss it. Which is exactly the point.
When the sales associate returns from the stockroom, he is carrying your new iPad in one hand and a modified iPhone in the other. That iPhone in the other hand has been loaded with a payment application to process transactions over the secure WiFi in the store, and it is wrapped with a skin that includes a card reader and barcode scanner. The associate scans the product, shows you the total plus tax on the screen, asks for your e-mail address, enters it, and then takes your card. A simple swipe, and the card is back on your hand, and you’re out the door. Signature? Apple has decided they don’t need one. Checkout line? A foreign concept here. Receipt? On its way to your e-mail now. In fact, you can check your iPhone on the way out the door and see it there, electronically. Returns and exchanges? They’ve got all your information digitally to make that process simple.
Evolutionary Leap: Not Such a Leap? So how far away is that experience today from what may come? What if you are already an iTunes customer? You’ve registered a payment card that you can call up for digital downloads and content purchases remotely from any wireless-enabled device. With a user name and password the purchase is complete. Your receipt is e-mailed to you. How much of a stretch would it be to go from the Apple store experience today to one where, instead of using your card to pay, you in a subtle twist receive a message on your mobile from the associate, as he’s back in the stockroom getting your iPad, that shows the purchase total and asks for you to reply with your iTunes ID? By the time he’s back to you in the store, the sale is complete, and you’re on your way, receipt on your phone? Apple sends the purchase transaction from the store through to a merchant processor just as before, only this time the iTunes engine sits in the process stream to convert your iTunes ID to a payment card, just as it does for song downloads and app purchases.
In that subtle change, card-based transactions from a point of sale have been converted to into something different — mobile transactions using a registered alias for face-to-face point-of-sale purchases. Cloud-based computing, IP-enabled point-of-sale devices, point-of-sale payments applications in software delivered as a service to those devices, and eCommerce checkout engines have all converged on this moment to create an entirely new payment experience inside of a very familiar process. Everything we’ve just described could happen today. Or at the very least, tomorrow.
Play if Forward. What if, as many have rumored, Apple is making plans to do exactly what we’ve just described? A bit of marketing to iTunes consumers — by some estimates nearly 170 million of them — and they’ll all know of a new way to buy their favorite things in an Apple store. Not an iTunes consumer? Register now in the store: It’s quick, and it’s easy. And the iTunes user base grows. How much of a leap from there to see iTunes users making iPhone-based in-person purchases at a physical point of sale? How much more of a leap is it to see Apple distribute, again as has been rumored, those portable iPhone-based checkout terminals to other merchants who want to repeat Apple’s success in reinventing the way sales are made in their own stores, cutting down on checkout lines and increasing sales and service opportunities in the process?
What if Apple decided to make the iTunes population available to those other retailers to enable the same kind of face-to-face checkout experience in their own stores? What if Microsoft decides to join in the hunt? “Microsoft’s retail processing software, and embedded payments abstraction layer to enable IP payments, powers (by some estimates) over 80% of all integrated point-of-sale checkout systems at major multi-lane retailers.” That adds an enormous population of points of sale to the new way of making payments. How many points of sale would you need, or do you have already have, to make this a viable solution?
What if other online checkout providers, who can deliver their payment applications to wireless-enabled terminals just as easily through software services, decided to make their own populations of registered consumers available to those merchants for mobile-based checkout? There are a few of them out there, like Google Checkout, PayPal, and Amazon One-Click, who already manage payments across multiple merchants using a single consumer ID with registered payment products processing in the background. How many registered users do those three, plus Apple, have among them? Enough to make an impact?
It Could Happen? It Probably Will Happen. Whether the hypothetical case illustrated above actually comes true exactly as described, or whether in some variation, remains to be seen. What is a near certain is that IP-enabled terminals will continue to grow at the physical point of sale. Payments applications, delivered to those terminals as software services, will grow along with them. eCommerce software providers and API managers and developers, such as IP Commerce, will continue to make improvements in the process for mobile and Internet payments, which can easily be translated to the new generation of IP-enabled point of sale terminals.
All that remains is for the payments applications managed by the major online checkout engines to be ported to the physical point of sale. With IP-enabled points of sale and software services driving them, that’s a fairly easy technical leap. Telling consumers about a new place to use their online identities at the point of sale? Marketing messages from the checkout managers and from the merchants, who — as with the example of Best Buy in our previous section are blurring the lines in communication, sales, and service between online and physical retail — can accomplish this. Consumer adoption might take time, but all the pieces are in place. And the “last mile” in the new model we’ve described is in beginning to look more like the “last inch.”
Lesson 3 Discussion Board: What do you think would be the biggest challenge in getting consumers to start using their online checkout identities, or registered aliases, for purchases at the physical point of sale? Click here to respond.
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Driving Payments Innovation through Education- PYMNTS University
Durbin Debit 101 (required): Retail Deposits Have Changed Radically Overnight
Debit 201 (Required. Debit 101 prerequisite): Is Prepaid “Debit-Lite?”
Point of Transaction 201 (required): Competition for Consumer Choice
Mobile 205 (required): GPC Payments Value Proposition
Mobile 206 (elective. Mobile 205 prerequisite): Emerging Payments Value Proposition.
Cloud Payments 210 (required): Building Value in the Network
eCom 301 (elective): Evolution of Online Commerce
eCom 302 (elective): Emerging Competition
Mobile 305 (elective. Mobile 205 and Debit 201 recommended): Emerging Markets Mobile Prepaid
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