April 24, 2015
There’s a lot of hype around e-commerce, all for good reasons, but e-commerce is still a very small part of commerce.
How Small Is It?
Look at the above picture: the big blue bars indicate offline sales and the small light blue portion is e-commerce. That’s how small it is!
Now, let me explain this in terms of sheer numbers: As per the statistics from eMarketer, global retail sales in 2014 was $22 trillion, of which e-commerce sales amounted to only $1.3 trillion. So, for every dollarspent on e-commerce, 17 dollars are spent in physical stores or being paid in person. So the big question is: Shouldn’t the entrepreneurs be focusing on the bigger chunk? This makes us think that the entrepreneurs looking at the payments and commerce space should be spending more mindshare on innovation in the bigger pie. Proximity payments clearly provide a pathway here..
Let's look at some proximity payment innovations:
Starbucks introduced contactless payments, through a partnership with Visa Europe and Barclaycard, and rolled out near field communication (NFC) point of sale terminals across 550 UK stores in 2013. Starbucks mobilized its own loyalty program by launching a mobile payment-enabled application for multiple smartphone platforms that can be used across the United States. The Starbucks Card mobile app enables mobile payments at the POS.
Credit and debit cards are stored in Apple’s Passbook iOS application, with Apple Pay automatically selecting the default card when in proximity of an NFC in-store terminal. Adding new cards is as easy as taking a picture of a physical card to have it then stored in Passbook, or simply enabling the card that’s already set up in iTunes for wireless payments.
Square has added a feature to its Square Cash app that lets users leverage Bluetooth Low Energy (BLE) to make payments to anyone nearby. The app can detect other Cash customers within 250 feet of the sender or recipient. The app also includes the ability to swipe a push notification to approve and reject a payment request. The app also provides a privacy feature which enables customers to choose whether to make themselves visible to others or stay private. The Cash app provides an effective P2P payment platform and only requires your debit card information. This makes it easier for mobile payment enthusiasts to pay each other for tickets, restaurant bills and in many other social scenarios.
Dwolla launched a new feature called Proxi which allows users to send and receive cash-based mobile payments based on their current proximity to another connected device. The technology bypasses the need for special hardware, like Square’s plastic dongles or NFC chips built into a phone, in order to make mobile payments.
Pay with Hailo is a service that uses Apple’s iBeacon technology to let users of the Hailo taxi hailing app pay drivers with their smartphone. Pay with Hailo uses Bluetooth Low Energy (BLE) technology built into drivers’ and passengers’ iPhones to recognize when a passenger is in a Hailo driver’s vehicle and invite him to connect and pay for the ride with a one-click confirmation. The company provides a seamless payment solution built right into the app and users can register their card on file.
Merchants can sign up to accept Bitcoin payments using a terminal supplied by startup Pey that uses a combination of iBeacon, QR code and NFC technologies. The current version of the terminal features a BLE beacon provided by Estimote. The iBeacon solution for iOS is a mixture of iBeacon and QR code. For iOS, the company offers a Bitcoin Wallet Launcher and its only function is to recognize iBeacon and launch, immediately, the camera so the user can scan the QR code quickly without having to unlock the phone.
Bank-led payment service Digicash has expanded its QR-based mobile payments platform to include new POS beacons that support NFC, QR and BLE. The Digicash Beacons were first tested in Luxembourg by banks BCEE, Post and BIL at Cora supermarkets, Apple reseller Lineheart and some convenience stores. The service has been integrated with Digicash apps issued by retail banks and funds for purchases made are drawn directly from the customer’s existing bank account using SEPA Credit Transfers.
Businesses across the London district of Brixton were equipped with Bluetooth beacons that allowed residents to make mobile payments using the Brixton Pound, a local currency designed to encourage consumers to spend their money in independent local businesses. The Brixton Pound mobile app, developed by startup Dingo, was made available for iOS device users from the beginning of July last year for use at all the 250 businesses that accepted the local currency. The service offers a mobile pay-by-text version that forms the basis of the new BLE service. To use the pay-by-text service, both merchants and customers have to sign up with Brixton Pound and register for an account. Once registered and validated, consumers transfer funds into their Brixton Pound account and can then make a payment in participating stores by sending a customized text to Brixton Pound.