May 29, 2014
Bluetooth Low Energy technology holds a great promise for the future in the Beacons Avatar. Though the journey for this disruptive technology has just started, beacons have the potential to transform retail, loyalty/offers and payments. And here is why, what and how of it:
Lets see how a shopper will benefit from beacons in a retail outlet (Source: Estimote website):
As John approaches the entrance, the violet beacon positioned in the window, sends a personalized message to his phone engaging him to read the welcome message.
John sees a great jeans. Thanks to another beacon located near the product, he can immediately receive more information and a special offer.
As he approaches the t-shirt section of the store, the yellow beacon sends a new message to John's phone with a recommendation for a new purchase. John decides to buy both of the items and uses the store's mobile app to finalize the purchase.
As John exits the store, the light blue beacon triggers a thank you message with shipping information which appears on his phone. His purchase gets completed with the credit card on file in the store's mobile app.
Here is a video showing practical use of beacons provided by Estimote:
For geeks, the image shows how beacons work from a technical standpoint (Source: Qualcomm's Gimbal page):
PayPal along with Apple started talking about Beacons
Paypal initially experimented with Geo location, leveraging GPS and Wi-Fi for iOS and android but they found that it sucked the battery life too quickly and would be a nuisance to customers. They turned to BLE or Bluetooth Low Energy through which connected devices can communicate with each other with the consumption of a very low amount of energy. This led to the creation of PayPal Beacon, a hardware device for merchants designed to enable a hands free payment experience for consumers.
How exactly does PayPal’s Beacon works?
Consumers have to download the Paypal app for their smartphones. Once a customer walks into a store, the hardware automatically detects the users phone and triggers a vibration to confirm check in. The customers’ photo then appears on the merchants’ point of sale system after which the payment confirmation is done verbally without touching his mobile phone or credit card.
Unlike most other technologies, PayPal Beacon does not track customers’ location constantly. PayPal’s use of Bluetooth Low Energy solved a major problem for consumers by significantly reducing the battery consumption in smartphones. When the Beacons hardware detects a customer with the app who is nearby, the merchant can attempt to engage him with special offers or discounts. The main selling point is Beacon’s feature of enabling a transaction to take place without opening an app, without GPS, and even without phone signal.
Apple’s foray into Beacons
In the early days of Febuary 2013, Apple was silently installing and testing a new technology called iBeacons at a number of Major League Baseball Ballparks in the United States. With iBeacons, one could pinpoint a location to with-in 3.5 inches and perhaps more in some circumstances. Apple’s aim was to creat a very rich foundation for the future of iBeacons that will not only include micro-location, ticketing, access, discounts and payments but also other use cases that I think may be even more surprising.
Apple’s iBeacon works on Low Energy Bluetooth (BLE), it is also called as Bluetooth 4.0 & Bluetooth Smart. It is a location-aware, context-aware, pervasive small wireless sensor beacon which will know where you are, what are you doing, how long have you spent time at which location, which merchant, in which isle of merchant store. Users would be pushed personalized in-store offers & you never know you might get a custom personalized welcome message next time you go shopping as merchant might know your name. It enables payments at the point of Sale (POS) such that you don’t need to remove your wallet or card to make a payment.
On 6th December 2013, Apple surprised everyone by starting the use of iBeacons solution across its 254 US retail stores.
The iBeacon system helped with customer sales and assists with in store services such as Genius Bar appointments and workshops. The integration of Apple’s retail stores with iBeacons acted as a cohesion with a future update to the Apple Store app, which can give detailed information on a product when a user walks near an item, according to a report from 9to5Mac.
The entire idea behind implementation of Apple iBeacons in apple store was to help in enhancing the customer experience when they visit the store. It kept customers aware about products, events and other information through messages. The ultimate vision however was to integrate the offline and online worlds of Apple products and customers and integrate payments deep into it.
Some of the Features of Apple iBeacon:
Since BLE is a low energy technology it may face lot of challenges, such as data transmission rate, streaming might not be possible, security still remains an unclear subject, how would it manage broadcasting offers information on mass scale when in-store traffic is at its peak.
Beacon’s adoption begins
On 20th November 2013, Redwood City, Calif. based Shopkick announced a partnership with Macy’s to deploy iBeacon transmitters or ‘ShopBeacons’ throughout the 155 year old departmental stores chain’s in Manhattan and San Francisco.
Shopkick is a shopping app that lets users flag items they want and then alerts them in store to offers on those products and others that the user might like. Shopkick is the first to establish the iBeacon technology in a retail outlet. ShopBeacons will enable Macy’s to track the customers movements and provide different offers.
Apple also filed a patent application which was released on June 12th 2013. The patent application directly covered a unique system whereby a user of an iOS device could not only be presented with options of local restaurants but also the actual wait times and seating availability in real time. The patent goes on to explain remote and in restaurant ordering systems that allows customers and wait-staff to place and modify orders. It also mentioned a payment option that would allow for pre or post payments of the order.
Optimism behind Beacon for Payment Experience
Firstly, Beacons does not require the customer to learn any new habits. Since this is a passive (not user-initiated) experience, the early implementations maximize the benefits of this push model without compromising on security and the potential for abuse.
Secondly, it allows for seamlessness between the online payments experience and the in-store payments experience. Tapping a confirmation box on the mobile phone screen is hopefully the only experience that the consumer will have to face either online or in-store.
Finally, this does not require any POS changes. Yes, new POS systems will find a way to create a new market, but unlike NFC, and similar to bar-codes, this will allow for bypassing the incumbents in the payments acceptance value chain.
Overall though, the biggest thing going for beacons as a payments vehicle is that is seems to be embraced by the biggest stakeholder – the retailer – and that it is an experience that was conceived first for shopping innovation, with the payments experience it enables as an afterthought.
Beacons caught the attention of retailers and merchants
Low cost devices were being designed and engineered in various shapes and sizes by hundreds of suppliers (even startups) and tech companies based on Bluetooth Low Energy or Bluetooth Smart. Merchants of different domains implemented the beacons technology:-
New developments also came up in the area of Beacons, bringing in new adopters:
Some known providers of Beacons are: