June 26, 2015
The proximity payments landscape in the US has evolved over a period of time. In 2015, we definitely have better options to pay than we had say, 15 years ago. In 1997, Mobil (which in 1999 merged with Exxon to become ExxonMobil) was one of the first companies to introduce us to the future of payments. The company had launched Speedpass, a keychain RFID device to enable electronic payments which was originally developed by VeriFone. Initially, Speedpass was developed for fast food chains restaurants and supermarkets. Firms such as McDonald’s and the New England grocery chain had also tested Speedpass across select cities in the US.
The number of Speedpass customers was pegged at 4.3 million in 2000, 5.5 million in 2002 and had reached 7 million in 2006/07. However, the numbers did not meet the company’s target of reaching 30 million customers within the first five years of launch. The program was considered successful in the initial years but post 2007, it looked like the payment system did not receive enough backing from the customers.
The first issue with the payments program was its security. In early 2005, RSA Security and a group of students from Johns Hopkins University successfully broke into the Speedpass system which resulted in security concerns. Another issue was the lack of ubiquitous acceptance as Speedpass was only accepted at ExxonMobil. Though McDonald's and New England grocery stores tested it until 2004, the units were removed in early 2005 as they slowly aligned themselves with other national cashless initiatives which they considered ubiquitous. Thirdly, once the credit/debit card got expired, there was no automated process to provide new cards/devices. Customers had to go through the painful process of calling up centers to update the card information; many customers would even forget to update it. Furthermore, Speedpass did not provide any integrated loyalty and reward programs at that point in time, which might be another reason for the mediocre response to the program.
The total transaction opportunity in the fuel and convenience store sector in the US is pegged at $526 billion. The market now has many payment programs addressing the concerns which were found in the Speedpass program. One such program is Plenti". Though Plenti is not a replacement for Speedpass, it does something that Speedpass didn’t, i.e., get reward points for paying at gas stations. Earlier this year, AT&T, ExxonMobil, Macy’s, Nationwide, Rite Aid, Direct Energy and Hulu joined hands with American Express to launch Plenti, the first US-based coalition loyalty and payments program featuring well-known brands. Consumers can earn and use Plenti points for purchasing a wide range of products, regardless of the payment method consumers choose to use. Also, with Plenti, customers have to actually dip a card and enter a zip code.
Another solution which is worth taking note of is the P97 Networks’ Kwik Chek. The company utilizes Microsoft’s IoT services and has two solutions in the market, namely Petro Zone Mobile Commerce (MC) and PetroZone Retail Fuels Module (RFM). MC is a mobile app that enables navigation, cashless payment and smart digital offers while RFM is a cloud-based point-of-sale (POS) solution that connects legacy systems with centralized management capabilities to enable improvements in inventory, pricing and supply processes.