2014: Will Merchants Beckon For Beacons?

By Jeffrey Green (@epaymentsguy)

With big-time players such as Apple and PayPal behind it, what could go wrong with a service that lets merchants identify when customers are in or near their stores, thus enabling them to provide customized offers that could save them money and enable them to pay without doing a thing? We could find out in 2014.

Next year, expect various merchants to test the so-called “beacon” technology in hopes they can get closer to their customers.

Apple’s iBeacon and PayPal’s similar Beacon technology are part of a new trend in which mobile devices increasingly will affect merchants’ in-store customer relationships. Qualcomm also offers a beacon service called Gimbal, and it anticipates other companies similarly to take advantage of the radios and other technology built into smartphones to roll out location-based products and services.

PayPal expects its Bluetooth Low Energy (BLE)-enabled Beacon to become generally available by early next year. When using the technology, merchants plug the small device, which runs its own Wi-Fi, either into a wall socket or laptop. The device emits a BLE signal readable by any device with the PayPal app.

Beacon recognizes the PayPal app and produces a vibration or sound to lets the customer know the technology is in use, and the individual may opt to check in via the app. When checked in, clerks at checkout automatically would see the facial image of the consumer he embedded in his PayPal app on the POS tablet screen and would touch the entry to facilitate payment when the customer is ready to pay.

Square’s Pay with Square payment system supports a similar checkout experience, but it uses the phone’s GPS geolocation service to identify customers present in stores. PayPal found that geolocation technology consumed too much battery power in the phone, so it elected to go with BLE instead to lengthen battery life.

PayPal Here, PayPal’s mobile reader and application, initially will support Beacon. PayPal Beacon’s capabilities also will work with its existing POS partners, which include Erply, Leaf, Leapset, Micros, NCR, Revel, ShopKeep and Vend. PayPal says it eventually may work with POS providers to integrate Beacon technology into the POS system itself.

Earlier this month, Apple said it would begin to install its BLE-based iBeacon system in its retail locations to help with customer sales and in-store services. The iBeacon system reportedly will be used in conjunction with an updated Apple Store app to provide location-based product information to customers through their iPhones or iPads.

Mobile-shopping app Shopkick in November released a new tool for retailers that uses iBeacon. Macy’s is Shopkick’s first user of iBeacon-enabled shopping alerts with ShopBeacon.

Qualcomm Inc. subsidiary Qualcomm Retail Solutions Inc. this month made its Gimbal proximity beacons commercially available to developers, claiming its beacons are accurate to within one foot and cost less to use than other beacons.

Companies that deploy the Gimbal platform can manage Gimbal beacons using Gimbal Manager. The beacons communicate over Bluetooth Smart for long battery life, as the battery in one Gimbal model could last up to three years, Qualcomm says. Depending on volume, Series 10 beacons are available for as little as $5 each, while the Series 20 beacons with the longer-lasting batteries could cost merchants as little as $10 each.

Beacon technology could prove to be beneficial to both consumers and merchants as long as it is not abused, thus creating an annoyance. If that occurs, expect the technology to have limited growth potential.