The Logic Group Blog - Mobile

Blog: Ubiquitous NFC

Mark Prior-Egerton — Thu, 18 Apr 2013 10:51:08 GMT

You may have seen our post last year on Apple snubbing NFC (near field communications) technology in its iPhone 5. This year, reports suggest that Apple is including NFC capabilities in its new iPhone design. This further fuels the speculation it will add payments to its Passbook allowing customers to pay, receive offers and collect loyalty points through their mobile device.

The Integrated Retailer recently published an article suggesting NFC-enabled mobile devices will exceed 500 million by the end of next year. It seems the retail industry and its ancillary services are looking at NFC as a serious game changer in customer interactions, from point of sale, up and cross selling, providing customer offers and collecting insightful customer data.

We recently announced our partnership with Proxama to provide in-store coupons and vouchers via NFC-enabled posters that consumers can tap their phone to and redeem at the checkout. The partnership also allows us to create NFC enabled retailer apps that send offers directly to customer devices that are in range and have the store’s app installed. These services can be integrated into a mobile wallet to provide a holistic approach to customer interactions through one device.

The challenge for retailers now is to break down the risk perception consumers have towards NFC technology and using mobile wallets. However, we can see that this is the case throughout history, the most recent being chip and PIN services replacing signatures in payment card transactions, or online banking. People may think it is less secure or more risky than the legacy method, but once it is adopted these worries are forgotten.

The retail industry as a whole must now work to educate consumers about the simplicity of using NFC technology and mobile wallets to dispel any misconceptions customers may have on data security, privacy or ‘spamming’. By illustrating that a mobile wallet will be kept as safe as loyalty card data, online banking data and that offers will be tailored to the customer or be ‘opt-in’, we may alleviate some of these worries and drive NFC adoption amongst end users.

RBTE: Mobile technologies at the heart of customer interaction

Mark Prior-Egerton — Wed, 20 Mar 2013 11:16:06 GMT

Retail Technology Business Expo (RBTE) this year was jam packed as ever, if not more. The technology for retail industry turned out to showcase the importance of successful omnichannel strategies and the role of new technologies in extending retail presence beyond the store.

The easily noticeable presence of products and services based on new wireless and internet-based technologies signalled the importance of mobile solutions for the retail industry.

For us, it was all about taking it one step further in highlighting the benefits of the mobile wallet. The mobile wallet is a game changer, but it only scratches the surface of what mobile can offer. The focus is all too often around the benefits as a payments mechanism. We were able to demonstrate that for the true value of the wallet to be recognised, retailers needed to understand the customer interaction opportunities it creates through loyalty and real-time discounting.

Our partnership with Proxama creates a complete NFC-based services offering for our retail clients. We are also working with Weve, as one of its first technology providers, to help design and build its loyalty and coupon pilot.

Meanwhile, Jon Worley (our Director of Customer Interactions) and Nick Rudd from Weve secured a lot of interest around the mobile customer journey and the unchartered new world of mobile interactions between retailers and consumers (watch out for the webinar version coming soon).

The bottom line: Customer relationships built on meaningful and targeted interaction will drive growth in the retail industry. Mobile will be the cornerstone of omnichannel customer interaction strategies. When considering mobile wallet services, let’s think beyond payments – loyalty, data, and insights.

Is this the future - high street to iStreet?

Jon Worley — Wed, 20 Feb 2013 17:44:06 GMT

It’s unimaginable to envisage a supermarket with no customers, no check outs – manned or unmanned, gondola ends with tons of offers, and even the smell of freshly baked bread. But actually, Tesco has five and walk-in customers aren’t welcome. They’re not on the high street or even on retail parks. That’s because they are ‘dark stores’. They exist to serve the ever-growing needs for online shopping.

It’s ironic really: Tesco opened its latest ‘dark store’ in January and it created 700 jobs. In contrast, BlockBuster and HMV were slow to respond to the fast moving Internet-enabled business model, leading them into the red.

Technology has rapidly changed the high street – although high rents and the changes in consumer behaviour have not helped. Some of this is down to the phenomenon dubbed ‘showrooming’, when people use their phones while out shopping to examine whether their prospective purchases are available cheaper online or elsewhere.

A recent survey found that four out of ten ‘showroomers’ end up making their purchases elsewhere. Indeed, one in five people said they only went into a shop to ‘check out’ something they planned to buy online. Yet, some consumers still value what the high street can offer – the chance to inspect what they’re thinking of buying.

Various market research studies indicate that on average four of ten ‘showroomers’ end up making their purchases elsewhere – with some consumers even admitting that they only go in-store to ‘check-out’ things they planned to buy online. There is an argument that consumers still value the high street – even if to inspect goods that they may eventually purchase online.

However, reflecting directly on the high street itself, technology can strengthen retention and sales. Firstly, being able to visualise and feel products is a big tick mark for the consumers. Retailers can capitalise on this and offer real-time discounts and incentives – increasing the likelihood of completing a purchase. John Lewis, for example, offers free Wi-Fi to customers' in-store, which allows the retailer to match and improve offers as well as provide complimentary products or services using its multichannel infrastructure. John Lewis encourages consumers to do what most of us already do, go into the store, then look online to check if you can get it cheaper or with an offer.

Secondly, data is a key benefit for high street retailers. The more you know about your customers, the better they can be targeted with promotions and offers, giving you better ROI. Take voucher sites for example. Various websites today offer coupons and money back to an anonymous customer, making it difficult to tie that back to the person who redeems it. Alternatively, if this is issued through a mobile, it is unique to that handset, so you know the demographics of who is using the voucher, their location and when they use it. Retailers can instantly know if the unique voucher code has been used or not, and by who. Access to such customer buying behaviour data gives the retailer much better control over its marketing budget. But it’s not simply the data they collect on consumers – it’s also the data they can provide to their customers for future tailored deals.

High streets need to make available the tools consumers desire to interact in-store. This will allow the consumer to not only browse in-store, it will also encourage them to complete their purchase and take their shopping away with them.

British Retail: What’s all the fuss about?!

Jon Worley — Thu, 24 Jan 2013 13:30:01 GMT

December retail sales have disappointed.
British music industry loses the high street presence of HMV.
Another few bite the dust.
Britain gets a chilly welcome to 2013.

If you still need more evidence that the Internet has necessitated a rethink of customer engagement strategies, then you may as well shut shop and protect the few assets and cash-in-hand available to you. The onset of the Great Reinvention (as we’d like to refer to the economic depression that started in 2008), marked the beginnings of the evolutionary process that would be driven by the Internet and the shift to online business and shopping. To feign ignorance to the fact that we’re through the evolution phase (of four years) and are now stood at the chasm, would demonstrate poor judgement and a clear lack of understanding of the stark reality that faces us.

The jump across the chasm will require a rethink of customer interaction and engagement strategies – and, an in-depth understanding of how consumers think, shop around and buy.

Blockbuster, Jessops, Morrisons and Comet have taught us that speed and agility are important considerations when adopting a multichannel retail strategy. For those who’d like to argue that online shopping reduces the lucrative profit margins (that retailers have enjoyed in-store), should be inspired by the 44% y-o-y growth in web sales at John Lewis – a major contribution to the 13% growth in revenues in December 2012.

British high streets will get a face lift in 2013. An experiential high street will start to emerge – one that caters to niche brands and customers and provides a face to virtual shopping experience. Brick-and-mortar shops will adopt a lean presence as they rapidly embrace a multichannel environment. Online only retailers will bring pop-up shops and digital windows to the high street – using tools such as augmented reality, QR codes and mobile apps to bring in customers. eBay has already put this into practice by testing pop-up shops in 2012.

This experiential high street, with its multichannel infrastructure, will be driven by actionable insights – the ability to capture, combine and analyse customer interaction data to deliver personalised, value-add engagement to customers.

So, if you haven’t already, it’s time to embrace the Great Reinvention.

Sunny and Disruptive: Outlook for Retail Industry in 2013

Jon Worley — Mon, 24 Dec 2012 10:06:02 GMT

2012 has been a tough year for the high street, with retailers struggling to drive sales and many high street stores shutting their doors permanently. By contrast, the online high street saw resilient growth. In fact, the latest figures of the annual IMRG e-Retail Sales Index have revealed that online sales in November are up 18 per cent from last year, as the festive rush has encouraged consumers to reach into their digital pockets. So, 2012 was a year of “Bricks vs. Clicks”, but what will drive retail in 2013?

Here are some of my thoughts for starters, or perhaps predictions for 2013:

Mobile

The choice of payment methods that retailers can offer to consumers seems to be constantly evolving and it’s often ‘make or break’ in a purchase decision. As devices and network speeds improve and more brands take on a mobile-first approach, m-commerce will continue to accelerate and build momentum in 2013.

Alongside the growth of mobile transactions, NFC and contactless payment methods are set to dramatically change how people pay for products and services. However, with slow consumer adoption, pay by reference and cloud based payments (e.g. PayPal and Starbucks) are seen as the disruptive forces in the future market. It seems inevitable though that being able to accept mobile payments online or in-store will be invaluable for merchants of all sizes in the coming years.

Mobile Wallet

The digital or mobile wallet will offer more than just another payment option. Focusing on the mobile wallet from a pure payments perspective massively undervalues the impact mobiles can have. It could be said that tapping a phone is as useful as tapping a card, and as such, there’s no real benefit to the customer. Thus, in 2013 payments will finally merge with loyalty and rewards. These three separate businesses will converge to make it easy for consumers and merchants to automatically leverage appropriate coupons and offers.

Consumer data

Loyalty schemes and purchasing habits are two sides of the same coin when looked at from a data perspective. If approached correctly, this data can be incredibly valuable for brands in 2013, not just to build relationships with consumers but to drive sales.

Loyalty schemes such as Tesco Clubcard, Nectar and Superdrug Beautycard are heading towards the point where they can connect up their huge data repositories with smartphones, in-store WiFi, geo-location data, mobile coupons and purchase technology.

This kind of inter-connected data, and the pre-requisite opt-in from consumers, means brands can target shoppers with personalised offers based on their own purchase behaviour. 2013 will see this sort of data turn consumers into fans and drive sales.

Multichannel – in reverse

Online only retailers such as Asos, Amazon and eBay are still very much the darlings of the e-retail world, and have in the past cast doubts on the future of the high street. Most high street retailers would do anything for the kind of growth reported by the likes of Asos, but the shift to multichannel by the high street means that online only retailers are now missing a key element, a high street presence.

2013 will see multichannel in reverse where online only retailers will bring pop up shops and digital windows to the high street – using tools such as augmented reality, QR codes and mobile apps to bring in customers. eBay has already put this into practice by testing pop up shops earlier this year.

On the whole, 2012 has been a tough year for the world of retail. In 2013, we will see some significant disruptions in the retail sector, and here at The Logic Group we are looking forward to playing an integral role by solving real problems for merchants, retailers, marketers and consumers.

Wallet Services Move to Gain Consumer Trust

Mark Kusionowicz — Fri, 21 Dec 2012 09:50:05 GMT

There has been a lot of momentum behind mobile payments, NFC-enabled PoS terminals and wallet services in 2012. Technology providers, retailers and merchants, as well as payment service providers are now quite openly supporting the case for multichannel customer experience management. Consumers too have shown some appetite for mobile payments and NFC-enabled cards, although they appear to have even bigger willingness to shop online. However, for consumers to readily adopt and widely embrace the new technology-enabled payment and interaction experience, the retailer, merchant, technology and payment provider ecosystem needs to understand consumer expectations from multichannel customer interaction systems and instil the confidence to trust new payment technologies to protect their identity credentials in any environment.

Earlier this week MasterCard took a step in the direction of building that confidence and trust for the consumer. The Logic Group and nine other leading payment service providers have committed to MasterCard’s PayPass Online Wallet Services – allowing them to securely accept electronic payments across multiple channels, no matter what device is used to make the online purchase – desktop, laptop, smartphone or tablet. The online and mobile commerce market will likely make up 45% of UK retailer total revenue by 2014. The MasterCard PayPass Wallet Service is leading the charge in making the mobile phone just one of the accessories in the multichannel ecosystem. PayPass as a platform (unlike a product offer) will cut across the multiple channels, devices and PoS terminals, as well as operating systems – liberating the customer interaction experience in the true sense.

As consumer confidence builds in 2013, the PayPass platform has the potential to become an integrated service that not only allows you to make secure payments, but also the one virtual wallet that contains your credit, card, debit card, loyalty schemes, discount coupons and vouchers, and air miles – all in one place. Safe, easy to use and hassle-free for the consumer. Rewarding for the retailers and payment service providers by helping them retain and grow their loyal customers.

At The Logic Group, we’re all excited about the potential of wallet services in 2013, and look forward to extending our relationships within the multichannel ecosystem.

Bricks versus clicks – was 2012 the death of the high street?

Jon Worley — Thu, 20 Dec 2012 16:45:31 GMT

Was 2012 the death of the high street? Will 2013 mark the beginning of a new commerce experience?

In 2012, many media and analyst reports pronounced the high street dead, with a new “death of the high street” story seeming to appear every week. Well known brands such as Comet, La Senza and Clinton Cards going into administration, coupled with the recent news that two in three high street stores started their sales two weeks before Christmas [1], suggests that bricks and mortar stores have struggled in 2012.

This doesn’t mean people are no longer buying though; with statistics showing that more people are shopping online and that, at an average spend of over £1,000 per head, the British are the biggest online shoppers in any major country [2]. However, if we drill down deeper behind these figures, it appears that online spend only accounts for 13 per cent of total retail sales [3], which begs the question - is the high street really dead?

A German parcel delivery firm, DPD (Dynamic Parcel Distribution), found that, when shopping online, 23 per cent of British consumers had purchased items via a smartphone, and a further 19 per cent had bought items via a tablet device over the 2012 Christmas shopping period. As mentioned in a previous post, mobile shopping could save the high street.

Instead of taking business from high street retailers, in 2013 mobile devices could enable businesses to build on customer loyalty and provide the personalised deals. Using the data provided by in-store loyalty cards and mobile sales, retailers can create customer-focussed offers to give them relevant content to encourage them to spend in-store. Moreover, retailers can interact and engage with customers on their mobile device, further personalising the experience.

Customer Loyalty research undertaken by The Logic Group and Ipsos MORI found that when judging a business consumers stated customer service was important to them (29 per cent), but profitability was a low priority with just 4 per cent stating it was a issue in how they perceived a company.

This suggests that customers will regard companies they see as being customer focussed more highly than those focussing on making a profit. Reputation is a major factor in growing a customer base. Word of mouth recommendations are the holy grail of customer acquisition, as potential consumers will approach these brands with an already positive feeling.

Personalised deals play to these two points. Even though the customer is getting a product or service at a reduced rate, it is specifically for them – and, they’ll liken that to a high level of customer service. Profitability is seen as a low priority for customers, so if they feel they are getting a good deal, they will not consider the company to put its profits ahead of customer needs.

In 2013, these sorts of big data uses will become increasingly important in commerce. Retailers should aim to integrate their online and high street stores, while targeting customers with personalised deals.

Customers receiving these offers on a regular basis will develop a relationship with the retailer, as they continue to have positive experiences when getting a good deal on the items purchased either in-store or online.

This takes them away from the ever familiar price comparison websites, as there is a trust that the brand they are loyal to will be their best option on price and service. After all, who wants to waste time searching for the best deal online when you’ve had great experiences with a retailer offering you the deals you want?!

Sources

Jones, D. The Sun, Price Crackers, p.24, 11 December, 2012
According to Ofcom’s seventh International Communications Market Report
The Economist Intelligence Unit’s Retail 2022 report

VeriFone Sail navigating the winds of change?

Mark Prior-Egerton — Thu, 20 Dec 2012 11:20:05 GMT

A couple of days ago I logged on to my computer to read that VeriFone had pulled their mobile payments device 'Sail' out of the market after an eight month battle with Square. The reason VeriFone's CEO, Doug Bergeron, gave for this was that the micro-merchant space is 'fundamentally unprofitable'?

Post this announcement, there have been a number of articles questioning if VeriFone's exit should worry Square. Personally I think the answer to this question is yes, but not necessarily for the obvious reasons.

Europay, MasterCard and Visa (EMV) Compliance

Cryptic maybe, but I suggest that a trip across the pond to Europe is needed to help solve this conundrum. You've probably heard of iZettle and SumUp which are the European equivalents of Square, but these devices use the chips in cards vs. the magstripe to take card payments, and therefore claim to be EMV compliant. However, after a closer inspection, Visa Europe stopped supporting iZettle payments on its network as the cardholders were asked to authenticate transactions with a signature drawn on the screen and not enter their PIN code in to the mobile device.

The EMV standard does allow for a fall-back to signature authentication, but only in circumstances where the chip card cannot be read or the pin entry device is broken. Today, both companies have adopted an online payment solution which is Visa Europe compliant i.e. where the customer types their phone number into the seller’s mobile device and they receive an SMS with a URL in it, where they are asked to type their card number into a web form for payment to be authorised.

A stumbling block for mobile payments

As the above highlights, EMV is a significant stumbling block for these mobile payment solutions in Europe. Perhaps VeriFone have taken this on board, with many US banks including Bank of America, Wells Fargo, U.S. Bank and JPMorgan Chase looking to adopt the standard over the course of the next 12 months. In a recent press release, American Express announced it is targeting April 2013 as the date by which processors must be able to support American Express EMV chip-based contact, contactless and mobile transactions. By October 2013, merchants will be eligible to receive relief from PCI Data Security Standard (DSS) reporting requirements if the merchants' point-of-sale (POS) are enabled to process the EMV transactions.

Only time will tell...

So, I leave the question open. Do you think VeriFone's withdrawal of Sail from the market was because it was 'fundamentally unprofitable', or strategic; recognising the long term opportunity for an EMV compliant mobile payment device? Only time will tell...

Mark Prior-Egerton is Solutions Marketing Manager for The Logic Group - a Payment Service Provider who launched the UK’s first EMV implementation in 2003 and European’s first PCI DSS compliant multichannel managed payment service in 2006.

Sources:

Verifone pulls Sail out of 'fundamentally unprofitable' mobile - 14/12/201
Should VeriFone's Exit From the Mobile Payments Space Worry - 15/12/2012
American Express Announces EMV Roadmap - 02/07/2012
iZettle launches Square-style mobile payments in the UK – 07/11/2012
www.sumup.co.uk/product 2012
Visa, startup iZettle settle mobile payments issue - 13/11/2012

Will contactless payments ever catch on in the UK?

Jonathon Solomons — Wed, 19 Dec 2012 15:18:40 GMT

Over 50% of adults in the UK [1] already have contactless credit/debit cards, yet how many of them know what they have in their pockets? And how many would be willing to use contactless payment cards, even in an existing enabled environment? A survey from Which showed that only 54% of 158 Londoners surveyed would be willing to use contactless cards as opposed to Oyster cards, even if it gave them the same benefits [2]. Combine that with the fact that many people feel they are not protected in case of fraudulent use, and one could be forgiven for thinking that contactless cards stand no chance. Is this just a case of lack of consumer awareness and trust?

Embracing contactless technology

Look to the East and you will see contactless technology widely embraced by society in countries such as China, Japan and Korea. China’s ‘Octopus’ and Japan’s ‘Suica’ enable contactless payment on mass transit systems - very similar to Oyster here in London - but Octopus extends contactless payments to convenience stores, fast food outlets, parking, service stations etc. (but is still a card you need to charge with credit).

Mobile payments and loyalty solutions

Contactless credit and debit cards take consumers beyond these systems, by allowing their use anywhere that accepts credit/debit cards even if contactless payment cards (Octopus, Oyster etc.) aren’t yet accepted there.

Going one step further, using your mobile phone for contactless payments allows you to configure your usage. You could define which card your mobile should use to pay for a bus journey, which card for a coffee, and even let you know when you are entitled to the next coffee free, handle that transaction for you and allow you to interact with smart posters and tags for further information and offers that are relevant for you. Imagine paying for parking with your mobile, tapping your smartphone to the parking meter and your phone displaying parking rates enabling you to then pay and monitor the cost, and even top up if you’re running late.

Adopting new technologies

Adoption of these new technologies is never ‘gremlin free’ and there are plenty of questions out there at present, standards to adhere to and consumer perception to overcome. But, in a world where we crave for convenience, contactless payments are a hugely credible solution.

So, will contactless payments ever catch on in the UK? Yes.

Remember a few years back when people were sceptical about booking a flight online? Now most people book their flights this way. The same goes for cinema tickets, grocery deliveries, car insurance etc. Consumers realised that not only was this convenient and secure, but that the systems could remember their preferences and they could receive other offers, products and services - improving the relevancy and personalisation of their experience.

An eDigital survey showed 3 out of 4 contactless users were repeat users – proving that that once used, consumers return to this method of transacting [3].

Customer awareness

Organisations that don’t embrace contactless will be like organisations that didn’t embrace email, or think a web site is just a static page with their phone number on. The sooner the industry makes its customers aware of the potential of contactless the sooner it will be adopted. Derk Ecclestone of eDigital commented: “We’re finding that users of the technology believe that it’s quicker, easier and more convenient and are most likely to use it at supermarkets, cafes and restaurants, where queuing times can often exceed expectations. It is essential that retailers, handset manufacturers, banks and technology providers work together to communicate these benefits better to potential users and quash growing concerns amongst consumers”.

Contactless payments on London buses

So, with more and more merchants adopting contactless technology (like Transport for London who last week announced contactless credit/debit card payment capabilities on London busses and will look to expand to tubes and DLR in 2013 [4]), and plenty of contactless enabled cards in circulation, the stage could finally be set, as long as the phone manufacturers can give us long enough battery lives to let us enjoy all the benefits that contactless payments via smartphones enable.

The Logic Group 'Mobile Customer Journey' solutions

Take a look at our new video and see the mobile customer journey that is possible using mobile NFC technology and the mobile wallet to provide an end to end valuable payments, customer loyalty and insight solution.

[1] – Payments Technology Conference 2012
[2] - TFL's bank card plans unconvincing, says London Assembly - 18th November 2012
[3] - Awareness of contactless mobile payments doubles on last year - 10th December 2012
[4] - Transport for London - Contactless Payments - 16th November 2012

Can mobile save the high street?

Mark Prior-Egerton — Wed, 05 Dec 2012 15:16:36 GMT

It's been a grim couple of years for the high street with an estimated 30 chain stores closing daily [1]. A recent PriceWaterhouseCoopers report suggests that, over the last 12 months, major retailers in the UK have closed close to 1,000 stores; caused by a combination of the recession and the growth of the internet shopping (compared to 174 in 2011). With many big names such as Comet, Game and Clinton Cards feeling the strain, the Government recently pulled together a think tank to come up with a solution to the demise of the high street. But, perhaps the rebirth of the high street is possible with the reinvention of retailing through an old foe (the internet), as we see a blurring of the real world and virtual worlds with mobile-commerce.

The latest results on smartphone penetration show that over half (56%) of UK consumers now own a smartphone, whilst around 1 in 5 (21%) have access to a tablet device [2]. Recent stats have revealed that 59% of us use our mobile to access the internet daily - whether it’s to check our emails, shop, bank, socialise or play games. All of these examples highlight how dependent we have become on mobile devices, with a staggering 78% of saying that we wouldn't leave home without it. Although 35% of us are already buying stuff using our mobiles, we're not quite there yet when it comes to fully loaded mobile payments [3]. It seems that we have some trust issues in terms of mobile security, but ultimately maybe we just don’t see the added value it will provide over and above traditional payment methods.

Mobile payments have become much more widely adopted in developing countries; with the lack of electronic payments and less access to money, mobile has filled the void in person to person payments (P2P). In developed countries however, the case for mobile payments has been a harder sell. The ease of access to cash and businesses facing the cost of deploying a mobile payments infrastructure means we are presented with a convincing barrier to entry.

So if it’s not through mobile payments, how will mobile save the high street? The answer in short is it won’t… on its own. Mobile is only part of the solution as merchants need to join forces and work SMARRT to survive. It has long been a misconception that the internet is a cheaper and quicker way to purchase, when in reality it can cost more. When you add up the delivery costs, wait time and frustration of having to send back stuff that either doesn’t fit or looks nothing like the image online, you start to wonder if there is a silver lining to shopping on the high street.

I picked up the acronym SMARRT when setting project targets, but I think it just as relevant to saving the high street as it is for effective project management. By SMARRT I mean Specific, Measurable, Attainable, Relevant, Rewarding and Time-bound. For those of you who are reading this and know a little about project management I admit that there is no ‘R for Rewarding’ in SMARRT projects, but for this to work for the high street it’s a must.

When we apply SMARRT to the high street we are talking about instant rewards at the point of sale, using big data. It might sound a bit scary, but it isn’t. It just means that we’ll get specific promotions (rewards) on stuff that is relevant to us, based on our purchasing habits i.e. what we’ve bought, where we bought it and how often. The attainable piece of this is just as important as the other parts, as we’ll only get rewarded on the stuff we actually agree to receiving.

Unlike current loyalty programmes, mobile delivers more value with big data and location based services. It has the potential to operate in a similar way to the virtual market place we get online with etailers such as Amazon. Where an item is out of stock in one store, merchants from a different shop (either another branch or a different retailer collaborating with the merchant) could check their stock and present an alternative item, which is price matched to the original store’s item. They can then provide a voucher for collection and this service can even extend to ‘out-of-towners’ being directed to the store’s street address through a navigation portal.

The main value of this system is in the delivery of real-time redemption, which enriches the shopping experience. Conceptually it could be like having your very own pocket personal shopper with you. For example, a customer purchasing a dress in Marks and Spencer could then receive a recommendation for jewellery in Monsoon that compliments the dress and the shoes they have reserved in Dune, with each item bought delivering money off the total cost of the outfit. Plus, when synced with a mobile calendar, the solution delivers timely and relevant rewards using personal data such as birthdays, weddings or even to celebrate a shopping anniversary with a specific merchant rewarding the customer with an extra discount or complementary item with their next purchase.

How much of this is fact or fantasy is to a degree down to the merchants on the high street. Some payment service providers such as The Logic Group have already developed the services to implement multiple payments, remote estate management, secure tokenised rewards at the point of interaction and are currently working with their clients to make the above become a reality.

In conclusion, I believe that mobile loyalty will be the driving force behind mobile payment adoption in 2014. Although 2012 has seen a slower than anticipated take up of NFC enabled handsets, SMARRT mobile loyalty propositions such as instant rewards will deliver the value added benefits to the high street and go some way to driving revenue and growth whilst rewarding customers at the point of interaction.

[1] - The Guardian: 18th Oct 2012

[2] - IMRG, the voice of retail: 11 October 2012

[3] - Think with Google: May 2012

Mobile Wallet Summit 2012

Mark Prior-Egerton — Tue, 04 Dec 2012 10:39:10 GMT

For some I expect that the Mobile Wallet Summit 2012 will have raised more questions than answers. Key questions that remained in my mind are; who's wallet will be adopted (individual vs. joint venture), what will wallets be used for (access, loyalty, payment, ticketing or identity), where the wallet will reside (handset, SIM or cloud) and ultimately who will own the customer?

One thing which all the panelists did confirm however was that mobile is still in a state of flux; the technology is evolving so quickly that we are all finding it difficult to keep up, and herein lies the problem. We can all see the potential of mobile as a solution for payments, but as we continue to load it with our own flavors of added value I’m not sure if anyone has asked the consumer what they actually want?

I don’t speak for all consumers, but the convergence of loyalty and payments makes sense to me. Why do I need another card in my wallet, another paper coupon or thing to remember when I’m buying stuff? YES I want to feel like I’m a valued customer and YES I will go back somewhere to get my discount off, but I begrudge feeling like I have to remember to do something to get recognised for my loyalty. If mobile can deliver anything I feel it can deliver this, a one-tap / click transaction for loyalty and payments.

As we all know, the UK is a country where the consumer is hyper-sensitive when it comes to trusting services, so combining an individual’s personal identity on the mobile just seems wrong to me. We could certainly provide the customer with the option to link to their own personal details held on HRMC’s cloud, but again this needs to be down to choice.

For me, the stand out presentations at this year’s mobile wallet summit were from Telefonica and Lemon. Why?, because they focused on innovations driven by the consumer need. As The Logic Group’s own Customer Loyalty research with Ipsos MORI identifies, consumers want to be rewarded at the point of purchase for real time purchases and not after it. Over the next twelve months I expect that we will see a change of pace in mobile with the Weve joint venture between EE, Telefonica UK (O2) and Vodafone UK becoming a powerful force in driving consumer adoption on Britain’s high streets. Transport for London raised their frustrations over NFC adoption and there was a hint at a fast Bluetooth solution. But, cloud is still very much a disruptive technology in this space with panelists and delegates suggesting that even though Square hasn’t launched anything on British soil, they are amongst us…

Although all of the panels provided the conference delegates with real insight and good debate, the last slot on Wednesday was worth the wait! Entitled “Dig Deep in to the Goldmine of Data and Realize its Real Potential”, here we saw some real golden nuggets on how mobile could evolve and add real value. By this I refer to the use of Big Data in the development of a mobile concierge proposition. Conceptually, this provides the shopper with relevant and real-time rewards not only at the POI but influences and empowers buyer behavior through combining multiple applications and habitual shopping. This is a similar thread that was discussed by Matt Blanks, Head of Business Development, Transport for London and Pete Blower, Technology Services Manager EME, Starbucks in their presentations.

As to the future evolution of mobile, Paypal and MasterCard see this as more than just the wallet but more as part of a much bigger payment experience, where the wallet is digital and accessed across multiple devices including mobile, tablets, kiosks, PCs and other formats we have not yet realised.

This conference has left me feeling very positive about The Logic Group positioning, our solution and the value added services we provide. If you didn’t get a chance to stop by our stand at the conference, our proposition is around ‘rewarding customer interactions’, delivered through a service-ready combined loyalty and payments managed service. Utilising a single API, this provides a number of customer benefits, perhaps the most relevant is in the provision of one-click transaction processing enabled through our tokenization capability.

Plus, at this time, whilst it remains unclear about which technology will prevail; our multi-device, loyalty and payment platform provides our clients with a future proofed solution. Broadly speaking, this means that when a consumer presents their mode of payment (contact or contactless card, NFC device, digital or mobile wallet, Google glasses) at the merchant’s POI, our solution is agnostic in accepting and securely processing it to the relevant merchant acquirer or through our in-house managed loyalty platform.

Christmas Shopping in the 21st Century

Marc Darling — Wed, 28 Nov 2012 14:24:41 GMT

“Black Friday” lasted a whole weekend (which was confusing) and Amazon won the day (interestingly with 85% of their Black Friday deals being bought via the iPad).

This was the weekend I would make my online Christmas purchases, and remembered that with two boys that (sadly) no longer play with Lego (other plastic brick building sets are available) – I was heading to the online stores - Next, Asos and Amazon amongst others.

I remembered that Amazon were now associated with the Nectar programme, and after messing around with the Amazon Window app on my iPad, I gave up and turned on my laptop. I soon found that I had to go through the Nectar site to launch the Amazon web page...sigh, not so seamless.

I bought a whole bunch of stuff from Amazon, with the usual great shopping experience using customer reviews to help me make informed choices on accessories etc. Final stage, confirmation of purchase and I get an offer – great! But, a coupon to give me money off clothing…sigh #2. I have never bought clothes from Amazon, and probably wouldn’t. This brings us back to the relevance debate from my previous blog (Relevance - frequent and often), this offer was not “in-tune” with what I had just bought, or ever bought from Amazon – a trick was missed here to get a repeat purchase from this consumer.

Again, purchases were made at Asos and Next. Credit card punched in for one, the other, bought on account – and I don’t think either process was better than the other. Back to the Nectar site to launch these web pages, and whilst I was impressed with the number of brands under the Nectar coalition, I couldn’t help remember a recent quote from Nectar Managing Director Jan-Pieter Lips “It’s a little bit like Noah’s Ark; our partners are all different species”. Sigh #3 – how can this be viewed as a Loyalty programme? Choices were already made, and I got a slightly frustrating experience just to earn a couple of bucks off my next shop at Sainsburys? I certainly didn’t feel any emotional engagement!

To summarise – firstly I would say that buying online is definitely the preferred choice of this blogger, however the experience was a little “flaky” and I wonder how it could be improved. The answer - storing credit cards details to make the payment easier (well done Amazon) across all e-commerce sites, linked with real-time brand-based Loyalty programmes with personalised and relevant offers that are part of the same transaction. The benefit? Less time worrying about your children peering over your shoulder to see what they are getting for Christmas? Yes, but also an improved consumer experience and an increase in repeat purchases.

What’s all the RFIDing fuss about?

Mark Prior-Egerton — Fri, 16 Nov 2012 10:46:20 GMT

On Monday (12th November) I was alerted by a colleague to a You Tube video going viral; if you haven’t seen it already it’s titled ‘The Risk inside your credit card’. It suggests that fraudsters can electronically pick pocket your contactless cards, so it’s not surprising it’s had over 5.5 million hits!

The video stipulates that armed with a contactless card reader, fraudsters can gather sufficient card information to clone the card and use it at retailers to make purchases - which isn’t that compelling until the video shows it being done.

My initial reaction was a bit of a 'so what' moment. Unlike the US, who still operate magnetic-stripe cards, all our debit and credit cards use EMV (Europay, MasterCard and Visa) smart chip technology. This means a fraudster could not simply clone and use the card, they would still need the cardholders PIN which is not transmitted or held on the RFID (Radio-frequency identification) chip.

The above does however highlight the potential for a far bigger threat if fraudsters could harvest UK card data with contactless card readers and send these on to crime syndicates in countries such as the USA, parts of Africa, and Mongolia, who have not chosen to move to the EMV standard.

Fortunately, our EMV cards cover this eventuality too as although the card number and expiry date are transmitted by the contactless chip (RFID), Dynamic Data Authentication (DDA) and Card Verification Values (iCVV) are used by issuers to identify fraudulent use of chip data in magnetic-stripe read transaction processing and will decline the card at the point of sale.

For card not present transactions (which are typically made over the phone or for online shopping), the CVV2 (card verification value) mandate is in place, this requires the cardholder to provide the rightmost three digits printed on the signature strip on the reverse of their Visa or MasterCard to complete the purchase.

So in summary, if you hold a smart card which is equipped with the EMV standard you needn’t have many concerns about your card details being used fraudulently at home or abroad.

Payments Technology Conference 2012

Jonathon Solomons — Fri, 09 Nov 2012 09:00:25 GMT

The Logic Group was delighted to attend and present at the second FStech/Retail Systems Payments Technology Conference last week. Bringing together leading figures from retail and financial services, the event showcased the latest developments, services and products in trending areas such as contactless cards, payment security, online payments, the future of cash, and social payments.

Jonathon Solomons, Solution Partner Manager at The Logic Group summarises the key messages:

Mobile Payments – Pingit

Derek White, Chief Customer Experience Officer at Barclays kicked off the presentations, revealing how Barclays Pingit is catching on, with 1.2 million downloads already! Leveraging the ‘Barclays Hyperscale’ machine’s four pillars of Cloud, Big Data, 4G and Open Innovation for enabling mobile payments, Barclays Pingit allows users to transfer money across accounts from their mobile phones.

The average transaction value is an impressive £70, demonstrating buoyant consumer confidence in mobile money, and as a consequence Barclays have already raised the limit per transaction to £750. Apparently Friday night is ‘Pingit night’, with tech savvy peeps making transactions such as sharing the cost of restaurant bills. It was nice to hear Derek discuss the importance that user experience played in Pingit’s design; focused on making it intuitive, engaging and secure.

Blurring the edges: changes in e-commerce

Jonathan Vaux, Senior Vice President and Head of UK Market Strategy at Visa Europe, spoke about how security and convenience were key pillars of their proposition, and how the speed of mobile adoption was astonishing (Barclays had shrunk development time from 2 years to 7 months to try and address the huge appetite for mobile payment solutions).

Perception is reality they say, and Jonathan made an interesting point that consumers perceive there to be more protection offered with card payments than mobile transactions in cases of repudiation. This touched on a key theme that ran throughout the day; there is a lot of education/awareness to be enabled if we want to see certain solutions adopted. For example, more than 50% of Brits already have contactless transaction cards but most aren’t aware of it. Then you have vendors whose customer facing staff are also unaware of their contactless opportunities. Jonathan also talked about his vision for the future, where we might be making transactions from steering wheel enabled devices.

Why cash is still King

For anyone thinking that cash is dead, Ron Delnovo, Managing Director of Bank Machine, put us right and was the most popular of presenters for giving out fivers for correct answers to his questions. I now know for example that there are about 45 building societies in the UK, whereas there used to be 2,500, and 90% of transactions in the world are cash based.

There was a strong theme of choice running through Ron’s presentation. For example, was the decision to only allow Visa card transactions good for consumers at the Olympics? Ron also commented that we will soon see big changes in Finland, Poland and Russia. Poland is an interesting one, as 33% of their POS terminals are already contactless enabled, so this is certainly a country to watch for progress.

Using insight into payments transaction data to discover hidden value

Whilst Ian Glanville - VP Consulting at The Logic Group - wasn’t handing out cash, he still caught the audience’s attention with his explanation of how The Logic Group are helping customers leverage the combined transaction data from debit and credit cards to give insight into customer demographics and behavior. This enables much more accurate engagement in terms of offers and retention, yielding tangible ROI through reducing the cost of offers.

Ian could tell you which percentage of card transactions are debit cards (62%), and discussed the trends in spending. This may seem like a simple statistic, but card providers, for example, only have information about their own cards transaction patterns. Merchants need to know the bigger picture if they really want to engage as best as possible with their customers.

Blackberry bites back

Gerry Kelliher from RIM gave us some insight into Blackberry’s place in the mobile payments ecosystem. With 33% of US users more willing to give up their TV than their smartphone, it’s clear (if it wasn’t already) that smartphones for mobile payments are the future of today. RIM are already enabling mobile payments with examples mentioned across Turkey and Canada.

The m-payments market

Kristian Thure Sorensen, Senior Manager, Mobile Payments and eCommerce at Nets, told us that 9 out of 10 smartphone users in the Nordics use mobile banking, so it’s a key market for mobile payments. Kristian explained how there is still a lot of hype about mobile payments, which is very well illustrated by the fact that for every Google wallet, there are 8 articles about Google wallets.

Kristian also teased us with talk of an augmented reality solution he’d worked on in a previous life, whereby you could point your phone’s camera at a street and it would overlay how much you’d spent in shops in that street from geo-tagged transactions, enabling you to take a potentially cheaper route home. It made me think twice about going home via New Bond Street! Kristian is a board member of Mobey Forum who provide some great resources in this space.

Dosh, Mulch and Black Ducks?

For those who stayed to the end, there were a couple of interesting presentations from Black Duck Software and Bin Weevils.

Black Duck are in the Open Source governance arena. What has that got to do with mobile payments you ask? Well, when you hear Sony say that 80% of software on smartphones is Open Source, there is the potential for security weak spots as a consequence. Along with the growth in malware targeted at mobile apps, this could be real threat to consumer confidence and therefore adoption in mobile payments.

The Freemium games chat introduced us to a world of paying by dosh and mulch (currencies used in Bin Weevils) and also how much some of the gamers actually spent in real life (up to $10k per month!), because they are being served with content that that keeps the user engaged.

Thanks to FStech for organising a super conference. I personally came away with a huge awareness of the pace of change in the industry, the real need for engaging, intuitive and secure systems, how actionable insight can enable a real competitive advantage and the need to ensure your audience is aware of the possibilities. If you attended the conference, please feel free to share any additional insights you took from the day.

A full review of the day is being released in December via FStech – so keep an eye out.

What does Apple snubbing NFC mean to the retail world?

Steve O'Donoghue — Mon, 24 Sep 2012 11:28:11 GMT

The iPhone 5 went on sale on Friday but there was something missing that many in retail and the payments space thought was guaranteed – NFC. When the launch was announced the week before, the exclusion of NFC was somewhat surprising. It was thought that on the back of Apple unveiling Passbook (a service that pulls together loyalty cards, tickets and coupons) in June, embedding NFC would be the next natural step to complete their mobile wallet offering. Mobile wallets bring together credit and debit cards, bank accounts, loyalty cards, rewards and coupons in one place, letting shoppers pay for purchases online and in physical stores too.

NFC is already backed by the large carriers and credit card companies both in the US and in the UK and it was thought highly likely that Apple would align with these organisations following the likes of Google having already developed their offerings.

The absence of NFC technology in Apple’s iPhone 5 has seeded the doubt that retailer interactions via mobile channels becoming the norm are a long way off. However, recent research from MasterCard proves that this assumption should not be made. It is forecast that by next year, 44% of retailers will offer contactless payment technologies in-store and 35% will invest in new mobile and e-commerce technology.

As a whole, in-store payments via mobile only scratch the surface in terms of the services mobile technology can offer to retailers. For the true value of mobile technology to be recognised, businesses need to understand that beyond payment, the customer interaction opportunities mobile creates are a huge factor in the sales process. For example, through a mobile device, a consumer can tap to pay while simultaneously providing loyalty details, redeeming a money-off voucher or obtaining additional in-store services. This provides a greater incentive for the customer to shop at the store and gives retailers invaluable data on their consumers, aiding marketing analysis on customer behaviour and purchasing.

So, while Apple may not be enabling NFC technology on its phones, it doesn’t mean the technology has become obsolete – for retailers there is more to mobile than just as a tool for payments!

Mobile Payments only scratch the surface of the services mobile can offer

Jon Worley — Thu, 23 Aug 2012 09:46:09 GMT

NFC-enabled mobile payments only scratch the surface in terms of the services mobile technology can offer to retailers. For the true value to be recognised, businesses need to understand that it isn’t in the ability to just offer a payment service – it is in the customer interaction opportunities it creates.

Focusing on the mobile wallet from a pure payments perspective massively undervalues the impact mobiles can have. It could be said that tapping a phone is as useful as tapping a card, and as such, there’s no real benefit to the customer. However, if a consumer is tapping a phone for payment and simultaneously providing loyalty details and/or redeeming a money-off voucher, while using it to get additional in-store services, it is a bigger incentive for customers and retailers alike.

The mobile wallet enables the collection of valuable data to create customer interaction opportunities for retailers, marketers and advertisers. These interactions can include in-store customer loyalty programmes, vouchers, or location based services for customers.

For retailers data is one of the key benefits behind customer mobile use. The more you know about your customers, the better they can be targeted with promotions and offers, resulting in a better ROI.

For example, if retailers issue coupons and money back offers via mobile, it is unique to that handset, so the demographics of the user are known, as well as their location and when they use it. Retailers can instantly know if the unique voucher code has worked or not, and by who. By accessing this sort of data it gives the retailer much better control over the marketing budget. Retailers will be able to use this technology to tailor offers to the individual and build a personal loyalty package and shopping experience for the customer.

Mobile phones remain a key pain point for the market as there are only 12 or so NFC compatible phone models currently available. Apple often bides its time before diving in to developing tech markets. However, it unveiled a service called Passbook that pulls together loyalty cards, tickets and coupons. But Passbook drew coverage for what it doesn't do: it can't link directly to credit or debit cards, so consumers can't use it to replace their wallets. Once the next Apple iPhone is available, which is expected to have some sort of NFC capability, an integrated mobile wallet is expected to help drive adoption.

Adoption is really all about consumer education and that needs to start by addressing the underlying security concerns. Once users understand and have the confidence that a mobile is safer than a plastic card, due to all the security measures built into today’s mobile devices, we will start to see better traction. Consumers will also need the reassurance that they will be not liable if they fall victim to fraud, it’s down to the banks. The industry can then begin to reinforce the value proposition by introducing vouchers, loyalty services and targeted media.

Mobile at the Heart of Future Customer Interactions

Jon Worley — Fri, 10 Aug 2012 11:41:32 GMT

Two news stories this week have really made the retail sector in the UK stand up and take notice. The first is Tesco’s introduction of an “interactive virtual grocery store” at London’s Gatwick airport, the first seen in the UK. Meanwhile, over in the US, Starbucks has announced a deal with Square, the company behind the same-named card payment reader, which will see Starbucks invest $25 million and switch its processing of debit and credit card payments to mobile payments.

Tesco’s introduction of the virtual grocery store is a huge step forward in the next level of customer interactions, driven by use of mobile. While this kind of technology has been used in other markets, predominantly in the Far East, for the first time UK consumers will be able to shop using a virtual shelf. Using their mobile phone customers can scan the products they want to purchase, adding them to their virtual basket and then arrange for them to be delivered to their home.

While this works very much like the home-delivery service, it means orders can be placed by scanning the products, away from the usual choose-and-click interface. This innovative offering takes advantage of technology already available in most of today’s smartphones. Consumers have the technology in their hands. All retailers need to do now is use it to their advantage through increased and innovative customer interaction points.

Starbuck’s support for Square is a very strong move, too – and again, it is mobile that is enabling this step change. Customers will still be able to use their cards and their payment card experience will not change. But for Starbucks could it mean the death of the till as the POS, as they are replaced with standard smartphones? Starbucks also plans to roll out other Square products, including one that allows stores to sense when a user has walked in the door and accept payments simply by taking the user's name.

With more than one million mobile transactions to date, Starbucks and the wider industry is starting to experience the tip of the mobile-driven iceberg.

As this video by The Logic Group shows, mobile has a huge role to play in the future of customer interactions. Our industry should be searching for more and more innovative ways of influencing customer behaviour through the use of mobile technology. This week’s news is certainly a strong indicator that mobile interactions are here to stay.

The Importance of Being Mobile

Jon Worley — Tue, 19 Jun 2012 07:46:48 GMT

Here at The Logic Group we are gearing up for the release of the next Imperatives for Customer Loyalty report, the annual insight into customer loyalty here in Britain.

We’ve been working with Ipsos MORI over the past few months collating and analysing the data to find what it means to be loyal in 2012.

The full report is due to be released next month, however this past week we were able to give a sneak preview of one section which focused on the use of technology in customer loyalty, and where the mobile operators and handset manufacturers rank in terms of customer loyalty across all industries.

Somewhat surprisingly, Mobile operators now rank in the top three with banks and supermarkets when it comes to customer loyalty in the UK – well clear of the remaining industries.

And perhaps even more of a surprise, in an industry where we all clamour for the latest iPhone or Android handset, the mobile operators experienced 20% more customer loyalty than the handset manufacturers. Some consumers said, “I change my handset every 12-18 months, so it is hard to keep loyal”, but in an era of Apple fanboys and Samsung dominance, it is a comparatively low figure.

The research also shows the changing habits of the UK consumer, with personal incomes under pressure and footfall across the High Streets on a decline, retail shopping behaviour is undergoing a rapid change as British consumers start to use mobile handsets for more than just voice calls:

- 39 percent of population uses their mobile phone to access the Internet.

- A quarter (24%) of Brits quite openly use their mobile phone to check product details, prices and reviews while shopping in-store.

- There is also a gradual consumer acceptance to interacting with brands and stores through mobile technology – 20 percent request loyalty schemes and offers on their mobile.

It is clear from the initial findings that mobile and technology innovation has a role to play in the future of loyalty in Britain, and as the high-street continues to struggle, an effective use of new technologies could help drive resurgence.

More information on the research can be found here. The full report will be released next month, stay tuned for more.

Getting mobile wallets to cross the adoption chasm

Luben Solev — Thu, 08 Mar 2012 09:17:30 GMT

Irrational Fears
Have you ever had an irrational fear? I've had quite a few in my time, but today I'll confess to one involving car windows. When I had older cars with manually operated windows I had a phobia of cars with electric windows. My fear was that if I drove one of these new-fangled electric windows cars, I'd have an accident on a bridge or along a body of water, my car would break through the safety barriers and would plunge into the dark icy waters. I'd try in vain to open the door, but deformation from the crash would make that impossible. The waters would flood the car electrics also stopping the electric windows from functioning. So, as I sit in the rapidly filling car I would curse the day I stopped using cars with manual windows. You'll be pleased to know that I did get over my irrational fear it's now over 5 years since I began using cars with electric windows and I'm still here.

It's security stupid

When I look at the recent hoo-ha surrounding the security vulnerabilities discovered in Google Wallet it makes me think that others might too be suffering from an irrational fear. After all, for these vulnerabilities to be exploited, the miscreants need to have physical access to the phone itself. As such, Google's assertion that the Google Wallet is still safer than the physical wallet holds. After all, cards are totally unprotected in your physical wallet.

What is slightly less irrational is the fear that a rogue app downloaded from an official (or in some platforms unofficial) app store might allow the developer access to the wallet and it's contents. It goes back to the initial slow uptake of internet banking on people's home PCs. People will be weary, but if the industry players demonstrate that they are taking security seriously, it should happen.

Thus I don't think security fears are the key roadblock on the road to NFC nirvana. The two biggest issues driving adoption of wallets are the availability of NFC-enabled smartphones and the fragmentation of mobile payment technologies.

Show me the NFC phone/PED

The former point is illustrated beautifully by the fact that neither of the two biggest selling smartphones in the UK last year (Samsung Galaxy SII and Apple iPhone 4s) sport NFC. But 2012 may be a watershed year. Already all major phone manufacturers bar Apple have announced NFC-ready phones and the much rumoured next iPhone outing (iPhone5 expected in September 2012) is also envisaged to sport the NFC standard. On the other side of the equation 2012 also sees all major PED manufacturers rolling out NFC-ready models into the marketplace.

Together we stand, divided we fall

The fragmentation of mobile payment technologies though in my mind remains the single biggest obstacle to mass adoption of mobile payments. Everyone seems to be trying to build their own mobile payments fiefdom, with the newswires littered by press release after press release on the launch of a mobile payment trial or technology. This fragmentation not only makes life tough for handset manufacturers (who don't know what they should be supporting in their upcoming handsets), but they also muddy the water for the media and the public at large.

What we really need is an industry-wide effort ala Chip & PIN, which can give us consistent branding and a reliable user experience, which together with much greater marketing backing will really help drive adoption. A whole new industry is there for the taking......if they only heed the advice of Khan Kubrat!*

* The Story of the dying days of Khan Kubrat (from Wikipedia):

According to legend, on his deathbed the Bulgarian leader (632ad – 665ad) Khan Kubrat commanded his sons to gather sticks and bring them to him, which he then bundled together. He commanded his eldest son Boyan to break the bundle. Boyan failed against the strength of the combined sticks, and so did the other sons in turn. Kubrat undid the bundle and broke each stick separately. He then proclaimed to his sons, "unity makes strength", which has become a commonplace Bulgarian folk slogan and now appears on the modern Bulgarian coat of arms.

Are you really worried about mobile security? And the survey says…

Mark Carpenter — Mon, 31 Oct 2011 12:23:30 GMT

I am always weary of consumer surveys, and this week I have seen countless examples of how the questions can be worded in favour of a desired outcome! The latest was looking at the security of the mobile as a payment vehicle, and just under half showed that “lack of security” as a concern.

As an example of “leading a witness”, compare the following sets of questions, and decide if they take you to a different answer:

Are you worried about the personal impact of payment fraud on your life?
Do you think that more should be done to secure your payment information?
Would you be concerned about all your payment details being sent over the air, and stored in your phone?
Have you thought what you would do if you lost your phone containing all this sensitive information?
Do you think that the lack of security is too big a risk to using your phone to make a payment?

Alternatively:

Were you aware that payment fraud has decreased over the last year?
Do you think that this was due to all the improved security measures?
Would you be keen on maintaining the level of security, yet making payment faster and more convenient?
Would you like to securely transfer your card details over the air so that you only have to carry your phone with you?
Would you be in favour of improving the payment experience through use of your mobile phone?

This is a poor imitation on a “Yes Prime Minister” sketch from 1986 (regarding conscription), but looks to highlight how a survey can lead to a differing conclusion on the same question. I am not suggesting that this was the case with the mobile survey, but it always makes me think twice about the results.

I agree that adoption for mobile payments will be hampered by security, but not necessary the lack of it, but more due to ensuring that the ecosystem meets the needs of our secure payment industry. In Europe, we should be proud of the security measures that are being constantly reviewed and improved through the work of EMV, PCI and other bodies. There is always frustration from merchants as it is easy to dictate regarding the security without worrying about the “real” (often financial) implications of the standards. Innovation in the payment industry can be hampered by security, and mobile payments are no exception!

Security surrounding the phone is a constant discussion point. The deployment model includes careful consideration as to the security aspects involved, and it appears that this is unseen by consumers questioned in the survey. Half of me is pleased that the public are shielded from the complexity of the payment industry, whilst the other half wishes the public knew of how much time is spent on creating a secure solution, so that they could sleep safe at night knowing their mobile payments are protected.

The mobile has become a fundamental way in which we go about our business, and it is not stretching the imagination to see us using it for payments – but first I believe we will see it used it for loyalty, discounting, couponing and vouchers at a point of sale. This is not to say that this area is any less secure, but this space lends itself to the marketing and competitive spirit encouraging innovation. Even today, I can receive or download vouchers to be redeemed at a point of sale using my mobile – this may be currently using barcodes, QR codes or plain text but through our solutions, we will be closing the loop with NFC very shortly.

NFC voucher and coupon redemption will help drive the payment industry in this space. Many of the barriers to adoption are slowly being removed, and the explosion in real-time validation and acceptance of vouchers, coupled with the increasing number of Contactless PIN Pads in the field will further encourage NFC to become second nature. I can hear the same people who are currently scared of mobile payments crying “If I can use my phone for loyalty, why can’t I use it for payments?” Well, first we must diligently work though the security aspects of the solution, and then we will make it a reality.

Are you ready to use your phone for payment? Not yet, but it’s not far away!

What does the new iPhone mean for the future of NFC loyalty?

Jon Worley — Fri, 21 Oct 2011 08:19:46 GMT

The big news this month is that Apple has chosen not to include NFC support in the new iPhone 4S. So what does this mean to the advancement of NFC customer loyalty interactions at point of sale?

Right now there are a number of NFC loyalty initiatives in the UK and Europe but penetration of these so far is low. There just isn’t a clear business case for an NFC based loyalty solution in a large retail estate, yet. What will tip the balance is the convergence of other interactions around the mobile device; payment, customer loyalty, couponing, marketing alerts etc. We all see this just around the corner with the likes of Google wallet and other operator led initiatives hitting the news every day. So why aren’t these leading to widespread NFC adoption and why didn’t Apple see the need to jump on the band wagon?

Perhaps for a large retailer to fully realise the benefit of NFC technology at point of sale it really is an all or nothing situation. This means aligning a number of diverse business objectives that have traditionally been managed by different parts of the organisation and have until now had unclear potential in a combined proposition.

Chances are the customer loyalty programme is driven by the marketing function. It may or may not be at a stage in its lifecycle that supports in-depth review and realignment around an integrated mobile strategy. A similar challenge could also exist with the payment process. Managed by the IT department or the Operations team the platform might be at the end or part way through a PCI DSS led update or other major refresh project.

Tackling the complex integration of NFC reader or combined PED with the existing point of sale solution piece meal without a clear strategy to meet all these emerging opportunities just doesn’t make sense. What retailers need is a single technical approach that can support the efficient introduction of these services as the business realigns its customer engagement strategy to maximise the new opportunities that mobile interactions present.

So there are challenges. But these will be solved because the stakes are high. I have no doubt that a well designed point of sale experience built around an engaging mobile proposition has the potential to drive incremental revenue more effectively and efficiently than we have been able to achieve before. This will be achieved by optimising the use of behavioural data in a real time solution that delivers what the customer wants at the right time.

It will be interesting to watch the adoption of this technology over the next year or so. None of us would deny that Smart phone take-up is accelerating as the devices become more and more central to the daily lives of a lot of people. As this penetration increases we get closer and closer to that tipping point where using a mobile device at point of sale becomes routine. Maybe then Apple will choose to offer NFC functionality to its growing customer base.

What can our industries learn from the success of smartphones and tablets

Luben Solev — Thu, 20 Oct 2011 11:56:51 GMT

I was recently sent a viral video of a baby who's used an iPad to such an extent, that she tried to use the same tablet UI gestures (swiping, clicking and pinch-zooming) when given a real (i.e. dead tree) magazine.

What struck me was how the video appeared to polarize opinion between the people who chastised the parents for 'ruining their child's future' and those who hailed this as a watershed moment in human evolution.

As with many things in life, I try to take the middle ground.

Yes, tablets and modern phone devices with their large capacitive screens are indeed enabling content consumption on a scale not seen before. And electronic paper eBook readers are enabling people to hold room's full of dead tree-style books in something that would fit in one's back pocket. Both of these points have to be worth something! Plus I don't remember reading about anyone selling their kidney for a desktop PC to browse the internet on.

But with schools and libraries still very much reliant on traditional printed matter, this baby (and her children and grand children no doubt) will grow up knowing how to read and use physical books just fine.

On the other hand, I can see that with the further development of these technologies, one day books will indeed be relegated to niche areas. Remember records, tapes and CDs anybody?

And before some of you start protesting violently or getting melancholy over the demise of paper as a form of an information transmission medium, just remember that it wasn't the first (see cavemen or for the believers amongst you Moses) nor were tablets the first to challenge the written paper's dominance. Do you recall the time when dictionaries were printed and we used to send letters to each other? The internet and email took care of both.

Just another step-change
And this is precisely why I have to disagree with the iPad evangelists hailing its ”magical and revolutionary” properties. We have to look at this as just another step change in the way we consume information and interact with technology around us. The bottom line is - consumers expect things to be easy. And following the ethos of taking complexity out of technology/online shopping Apple this year briefly captured the title of world's biggest company based on market valuation (before falling back to a still respectable second place) and Amazon has become arguably the biggest etailer in the world.

The power of 3
So what does this mean for all of us in the Loyalty, Fraud and Payment fields? Well, some could be confused into thinking that the answer is apps or cool chrome buttons, but for me the key in the success of modern smartphones and tablets is as much in under the skin integration as is with the resulting ease of use.

Combining payment, loyalty and fraud functions together into a single customer interaction management solution can make things easy for customers too in a number of interesting ways.

For example, combining Payment and Fraud data will help drive down card fraud even further than with the current methods of doing fraud checks with each payment over a certain value, which will lead to extra revenue for banks and retailers and lower banking costs for consumers.

Combining Loyalty and Fraud can improve loyalty scheme ROI by reducing losses due to sweethearting and allow retailers to pass greater rewards to their customers.

Combining Payment and Loyalty can mean the end of carrying numerous loyalty cards/key fobs as well as tedious sign up processes. It can even give retailers the ability to start offering all their repeat customers tailored offers at the point of purchase before they have even actively opted-in to a scheme.

The combination of all three services will contain all of the above benefits together with the advantages of storing the information in a single database. And together with other technologies such as tokenisation, this triad will allow retailers to offer their customers a fast, intuitive, safe and rewarding shopping experience whether in-store, online or on their phones.

And once that's all in place, we'll have plenty of time to spend fretting over what gradient to use in the latest iteration of our website's 'BUY' button.

What is the future for the physical wallet?

Mark Carpenter — Fri, 19 Aug 2011 08:19:59 GMT

I am looking for a new wallet. It must be leather, bi-fold, and have a space for notes...I abandoned carting around loose change a while ago! I have been wondering if in five years, or may be ten years the wallet as we know it will still exist! I only use my wallet to carry payment card, one or two loyalty cards, and a note or two just incase I have the misfortune to find somewhere that does not accept cards.

I am a big advocate of contactless payments. It makes life simple, and has meant that I no longer have to weigh my pockets down with coins. Working in the card payments industry, I of course always try to use a card over cash, and this has changed my requirements for my new wallet without a coin pocket.

The in store experience is changing fast. The typical till point is being replaced by a mobile point of sale, enabling staff to approach you to assist as well as convert a browser into a buyer than for you to decide and wait in line to pay. This is achieved by new technology in tablets PCs and wireless pin pad - an area that seems to be popular at the moment - and only a small extension to the existing payment infrastructure.

As I write this I am sitting in the car park of one of the UKs largest Telco’s. I am here to discuss the future of mobile payments both in store through wireless points of sales and wireless pin pads, as well as new and exciting ways to reach a mobile customer base. There are still many uncertainties in the space, but one thing is for sure, the customer experience should be the driver in the multichannel experience. We can no longer look at multichannel in a silo'ed fashion, but ensure that customers gets a service that will bring them back again and again - regardless if they are using their phone computer or are in store.

Mobile phones are now coming to market with contactless NFC technology. This means that in a couple of years I might be able to store card information in the phone and leave the wallet at home. So, the card has removed (nearly) the need for notes, contactless has removed the need for the change, and the phone will remove the need for cards! Were does that leave the need for my leather wallet?

Is there a worm in the Apple?

Mark Carpenter — Wed, 27 Jul 2011 14:06:04 GMT

Why was a much hyped retail experience, such a disappointment?

Working in the multichannel payments industry and having responsibility for the Point of Interaction, including the customer journey, I am always interested in improving the retail experience through new and existing technology. I have been in a number of meetings where retailers have asked if they could replicate the experience received from a certain fruit based store!

This week I had reason to visit one of their stores, including purchasing something, and I had a great deal of expectation from the visit from a research point of view. First, it may be worth explaining what I was expecting, before discussing why I feel that it was one of the most painful purchases in many months!

From previous conversations, I was led to believe that this store had removed the concept of a checkout, and allowed all their staff to perform a consultative selling role. I wanted to discuss a product with a sales assistant, see alternative items, and get specific technical details from them. This should have been possible through the mobile “point of sale” tablet they were carrying. Once we had agreed the right item, I was expecting to be taken to where it was in the store, for the sales assistant to scan the item from the mobile PoS, and pay by card there and then – using a wireless PIN pad. I was expecting an option to have the receipt printed or emailed to me. The reason I thought that this would be how it would work, is because this is all available today through our current existing payment solutions!

So what did happen?
First, I had to find someone I could speak to. Not having a fixed location, the sales assistants had the freedom to wonder away from busy areas, and I found myself walking in circles trying to find an assistant. Once I had located a “target” I waited in a disorderly snaking queue, until I was at the front. At this point, it appears that the person not only failed to answer a single question, but also had no inclination to use the lump of hardware to assist in responding! I then disappointedly set off around the busy store to find the product, and assess their suitability through guesswork.

Product located, and selection made, I once again had to wonder aimlessly around the store to queue for a staff member while others in front were trying to get answers to their own questions! After a painfully long wait, I made it to the payment process. The item was scanned (as expected), confirmation of payment (Visa debit) made, only to be told that we would have to go over to a fixed location where the card reader was located! We then stood side by side to queue for use of the reader. More time later, there we were, card in hand hovering over the PIN pad while the assistant then told me that his connection had dropped, and he will just scan the item again!

I am a patient person, but this was almost too much for me! We were ready; I inserted my card, entered my PIN and made the payment. Done – or so I thought! The assistant asked if I wanted a receipt – the options were “take it or leave it!” no email or Text options! Feeling uncomfortable about walking out a store with no proof of purchase, I opted for a receipt. To my amazement, the assistant told me he would be back in a minute while he went and got it. A minute may have been fine, but he was gone for an eternity before appearing looking confused as to who the receipt belonged to! I identified myself and I obtained the slip of paper.

“Do you want a bag?” he asked.

“Do you have one on you?” I responded.

“No, but I can go and get one” he retorted.

This was the final straw for me. Bag-less, and feeling cheated by the experience I left the store to watch my purchase get wet in the London rain as I dashed for cover.

I am not suggesting that I received the typical customer service, but for a company trading on its image (and a couple of sound products), I am amazed when I think back to being asked if we can replicate this experience! I can, but I like to think that with some careful thought and business understanding as to the customer experience (rather than to crowbar technology in for the sake of it) many of the issues I faced would have been elevated or eliminated altogether.

The Payment experience is not about the speed though the till, but the manner in which we get there. The right multichannel payment solution can dramatic help in the customer journey, especially as the final payment experience has the potential to leave a lasting impression on the customer.

Similarities and differences between Mobile and Contactless payments

Robin Adams — Fri, 22 Jul 2011 15:02:22 GMT

As we have seen, contactless payments are beginning to move into the mainstream. As my colleague Mark Carpenter noted in his blog, support for contactless transactions is moving out from the metropolis, even to the rarefied environs of his country retreat.

According to Visa Europe, in 2010 it alone issued 10 million contactless cards throughout Europe, the bulk (over 8 million) to UK cardholders. The plan is to double that number in 2011. No doubt Mastercard have similar plans of growth over the coming period.

However, technology doesn’t stand still and only a couple of months ago Orange and Barclaycard announced the availability of their mobile payment solution “Quick Tap”, via a smartphone, which will also provide contactless payments. These payments can be made at exactly the same terminals as those for smartcard contactless terminals, so long as they display the Mastercard Paypass logo.

I thought it might be worthwhile considering the similarities and differences in the two models.

Firstly the similarities; both are permitted to pay for transactions of total value of less than £15 and both require the user to hold the device (card or phone) within close proximity of the reader. Both utilise a technology known as Near Field Communication (NFC).

From a security perspective, a contactless card can only be used a specific number of times without a PIN, before the user is prompted to go through a traditional Chip& PIN transaction. There is an internal counter which is incremented every time a contactless transaction is successful and every time the card is used in a traditional Chip & Pin transaction this counter is reset to zero. If the counter reaches a threshold, then the card is forced to perform a standard Chip & Pin transaction.

From the perspective of a smartphone this is where things differ as this is not possible. – Getting the phone to fit into a card reader isn’t going to work. Consequently the phone is preloaded with an amount of money, upto £100 in the case of Quick Tap, which can then be used for contactless payments. Once these funds are exhausted a user is required to top up the phone using a phone application and a PIN. In addition it is possible to configure the phone such that a PIN needs to be entered (on the phone) before a contactless payment is made, although this does seem to negate the benefit of contactless and fast payments.

The nice feature of this smartphone system is that it is a zero-cost addition for merchants, if they already support contactless payments from Mastercard and Visa. The fact that the payment is made via a smartphone rather than a smartcard shouldn’t make any difference. In fact the only thing they may need to consider is to train their staff that this is coming along, so when someone does wave a phone at the reader and walks away, it isn’t fraud just the advance of technology.

I 5683 PIN - Common PIN numbers revealed

Mark Carpenter — Mon, 04 Jul 2011 10:19:24 GMT

Last week, Apple withdrew an application that asked for a 4 digit pin on startup. Unbeknown to the user, the application was storing the passcodes and transmitting them back to the developer. Fortunately this time, it was not for malicious purposes, but more out of curiosity! The developer was amazed how the same passcode was used again and again, and that half of the codes would not have been difficult to guess.

With so many requirements on a four digit PIN, there is a tendency to reuse the same PIN across multiple cards and devices. It would not be a stretch of the imagination to suggest that the passcode used for this application would have been the same as the one to unlock the phone, which would likely be the same as the users payment cards!

Over 47% of the results showed that either 1234, or 0000 was used as the code. This might not be a fair reflection on card PIN numbers as apps are almost disposable, and people would enter a PIN to have a play with the application, and then discard it – in this case, I would not expect anything other than a simple passcode to be used. Where the results are more interesting is in the use of patterns including 2580 (a vertical line down), 0852 (a vertical line up) and 5683 (L O V E on a keypad!) accounting for another 25% of passcodes.

Results also show a high proportion of numbers starting with 19 or 20 – suggesting that a year (year of birth?) is being used for the code.

How many of us fall into the trap of reusing our card PIN in other applications? More and more of us have Smartphones and other devices requiring a passcode. This analysis has certainly made me think about ensuring that my secure details are “secure!” As the phone becomes an integral part of our lives, now including making payments from the phone, should we look to increase the security surrounding our PIN’s and passwords?

How many of us will rush out to change our PIN’s after realizing how exposed we are from using patterns or dates of birth? I for one will give a little more thought to my next passcode – hoping to fall out of the 70% included in the top 5 most common used codes!

Why are you waving my contactless card around?

Mark Carpenter — Tue, 14 Jun 2011 16:05:23 GMT

This weekend I witnessed a major breakthrough in contactless payment acceptance. Having spent a lazy sunny afternoon in a beer garden, we asked to close our tab. I watched in disbelieve as the waiter started waving my debit card back and forth over the PIN Pad for a good minute, before inserting my card into the reader looking slightly disappointed. Having noticed my quizzical look, he went on to explain that their PIN pad accepts contactless, and he had been waiting for the day that someone went to pay with a contactless card! For me this was very encouraging – Contactless has migrated from focused busy London locations, all the way to a sleepy village pub 50 miles outside the capital! This waiter not only knew that the PIN Pad supported contactless, but also must have recognised the symbol on my payment card!

The reason that this payment transaction was so unsatisfactory for the waiter was that after the initial excitement of being able to try this emerging technology – he did not realise that there was a £15.00 limit on contactless payment transactions – and my bill was far in excess of this limit.

On seeing his dissatisfaction with having to insert the card as normal, I explained about the limit for contactless. Showing a level of knowledge on the matter, I was then bombarded with questions relating to contactless; How long does it take to process? Do customers still need to enter their PIN? How many people have cards? Is it secure?

It appears that aside from waving the card at the reader, he had no idea what should happen next! I wonder if the contactless transaction had been successful, whether the waiter would have been confident of this fact, and not had to double-check (supposing that someone else understood how it worked) – increasing my transaction time further!

After a two-minute education on both the process and the benefits of contactless with the waiter, I left him armed ready to take his first contactless transaction at a later point. I hope that he will explain this to others so next time I visit, the queues at the bar will be dramatically reduced through speed and efficiency of contactless payments.

Since we started supporting contactless transactions in our payment solution over 3 years ago, it seems that the market is now ready to move forward. I have always said that education is going to be one of the big obstacles to overcome, and this takes more than a rollercoaster advert on buying bananas! That said, it appears that even the very passive approach to education is reaching some people (my waiter included), but still more needs to be done for mass consumer understanding. Even if there are cards in the pockets of consumers, PIN Pads in the field, merchants still have to know how to use them, and to be able to explain the benefits.

If I had no understanding of contactless, what would I have thought while watching a waiter wave my card in the air! One thing is for certain – without having to verify the payment transaction by PIN, I would have been a little concerned with the transaction, The lack of knowledge from the staff, would have frightened me more. It has taken 10 years for PIN entry behaviour to be engrained in us – how long will it be before we stop worrying about it at all?

Mobile viruses - A viable threat to mobile payments?

Luben Solev — Fri, 08 Apr 2011 12:05:27 GMT

Every man and their dog has a smartphone these days. Whether an Android, Apple or Blackberry device, today's mobiles are as powerful as desktop PCs were only a decade or so ago. They can browse the internet and run a countless number of applications. As such is it inevitable that more and more people are starting to use them like they do with their main PCs – keeping increasing amounts of sensitive personal information on them and using them to make purchases and do personal banking. The problem is that unlike their PCs, most mobile phones are not currently adequately protected against viruses. But how many smartphones are there and do people actually use them in sufficient numbers for this to be an issue?

The potential scale of the issue

According to Gartner in Q3/10 88 million computers (desktop/laptop/netbook) and 80 million smartphones were shipped globally. Half a year later down the line, with mobile manufacturers bringing out new models with ever-increasing frequency and the proliferation of more and more tablet computers, the balance has probably tipped in favour of smartphones. So we know for sure that there are a lot of devices out there. But are they being used?

Well usage figures from Tecmark show that smartphone web traffic now accounts for over 8% of all web traffic in the UK and is growing exponentially. Business Insider tells us that the UK has the 5th biggest mobile market in the world after USA, Japan, Korea and Italy. Ofcom calculates that mobile internet usage rocketed by 240% between 2009 and 2010.

All of these stats point to the fact that the online market is already big and in continuing to increase at a dramatic rate. So where does the problem lie?

Consumer perceptions are at the heart of the issue

Over the recent years intensive media coverage has first alerted then educated the wider public to the threat posed from email scams and viruses/trojans as well as the importance of having a firewall and an up-to-date virus scanner installed.

The problem is that consumers don’t think of their smartphones as just another PC, even though modern smartphones can perform all the every day tasks a PC can.
Most consumers do not have virus scanning software installed on their smartphones and the key mobile operating systems (Android, iOS, Blackberry & Windows Phone 7) don’t contain such software by default.

Furthermore the proliferation of app stores and 1 click installation have made it easier for people to add new functionality to their phones. People add and remove apps in a much more casual manner than they would do with their home PC.

Proliferation of viruses onto mobile platforms and their impact

Virus writers have been quick to take advantage of the 3 above points and have started writing increasingly complex and capable viruses for these new platforms. A case in point is a virus dubbed Geinimi. Usually posing as a gaming app in unofficial Chinese Android app stores, once installed on a system, Geinimi is able to:

Send personal information to a remote server
Receive commands from remote servers enabling the infected mobile device to become part of a botnet
Send SMS messages to premium rate phone numbers

All without the user’s knowledge. Whilst today such viruses are rare and their proliferation rate is relatively slow, if unchecked they could become mainstream very quickly indeed.

The importance of Android to this debate

You may have noticed that the Geinimi trojan (like most of the mobile viruses in the wild today) is written for the Android platform. Helped by its pseudo open-source status, and backing of the biggest internet company in the world (Google), Android is now both the largest and the fastest growing smartphone platform in the world. Due to this popularity Android has naturally become the virus writer’s favourite OS (in a similar way to how Windows became the favourite desktop OS for PC virus writers).

Another reason that virus writers focus on Android is its relative openness. Apple’s walled garden approach may be restrictive (to the point of being viewed as anti-competitive by some), but at least it allows for careful vetting of all applications sold through its app store. Of course with Apple’s iOS, unless you jailbreak your phone or tablet, you won’t be able to install applications from non-app store sources. On Android you can install applications from non-official sources, which gives rise to the possibility of rogue applications being installed.

So what can be done?

The proliferation of mobile payment fraud can be averted through concerted actions throughout the related industries. These actions will probably include:

1) Media
Education of the wider public in the importance of using mobile virus scanning software, being careful to only installing applications from official sources and generally being aware of security advice issued by the mobile industry

2) Mobile OS developers

OS developers such as Google, Apple, Blackberry and Microsoft need to put a big focus on making their platforms secure and supplying their end users with virus software. PC operating systems like Windows 7 already come with a pre-installed virus scanner software and the same should happen in the mobile space.

The Mobile OS developers also need to improve app security screening before apps make it onto official app stores and look at ways of minimising the possibility of apps from unofficial app stores infecting people’s smartphones (obviously without in the process limiting end-user choice).

3) Network Operators

Network operators need to ensure that the phones they issue are kept updated with the latest security patches. Automating this process will ensure that no phone is left on an older version of software which is vulnerable to infection. Network operators also need to look at the possibility of providing virus detection software either free of charge or as an added extra until mobile OS developers introduce such features into their OS’ by default.

4) Retailers and Financial Institutions

Retailers who want to sell through the mobile channel or banks who want to enable mobile banking services need to ensure that all development (whether through platform specific apps or platform agnostic mobile websites) is entirely PCI DSS compliant. On top of that they need to include extra security features to ensure that even if the security of the mobile device has been compromised, the account security cannot be breached.

Banks are already leading the way in this with the likes of First Direct making people enter three random characters from their password instead of the whole one whilst Barclays use an external Pincentry security token which uses 2 factor authentication. The aim of both of these approaches is to minimise (if not annul) the possibility of account security being compromised by logging in or initiating a transaction through a infected mobile device.

Retailers also need to look at similar ways of securing their points of interaction; perhaps by making us enter a random subset of our full passwords and periodically asking us for extra information such as security questions or information on their transaction history.

5) Individual Consumers

But at the end of the day no one is going to protect you the way you protect yourself and end users need to realise that “with great power comes great responsibility”. Or more accurately that as phones become more integral to our lives, they also become more dangerous if a malicious hacker takes control of them. Thus we all need to be more careful of how we use these small but increasingly powerful devices.

Too much fuss about mobile technology

Mark Kusionowicz — Wed, 30 Mar 2011 15:14:30 GMT

SMS, NFC, HTML5, Apps, smartphones, tablets, Twitter, Facebook…how do you choose what to use?

At the Retail Business Technology Expo last week I had the pleasure of hosting a lunchtime roundtable of executives discussing trends in mobile retailing. This group represented a wide span of retail interest from coffee shops to clothing chains, from luxury up-market department stores to brands solely trading online, but they did come to something of a common conclusion – the technology was not the important consideration.

I hasten to add that they all did believe these technologies would open up opportunities, and each organisation would have a slightly different need and approach to benefiting from them. However, the start point of the conversation should not be “How do I exploit mobile technology?” Indeed when considering the question “What do we mean by mobile?” one participant noted that they talk about “mobile consumers” rather than “mobile technology”. Here we have the key observation, and it is one that is old as retailing itself - all considerations should start from the consumer viewpoint.

Whether the retailer is looking to acquire new customers, to increase the spend and loyalty of existing customers, or a combination of all of these it is their engagement and interactions with those customers that will deliver the results. The customers today are more demanding than ever about how they wish to interact and the most important consideration is to identify what those demands are, how extra value could be added to ‘delight’. Then, and only then, consideration should be made of which technology could deliver that value.

It does not have to be the most advanced high-tech approach either. If you identify that ‘added value’ to your customer would be that they do not need to lug a tent and sleeping bag on public transport to their music festival of choice, then why not deliver the goods to the festival site for them, whether they order in-store or online, as Millets do? If your customers’ main headache is the need to wade through complicated parts lists trying to identify which car bulb is right for their vehicle why not let them text in their registration number and you tell them what they need, as Halfords do?

The old adage that the ‘customer is king’ still holds - what mobile technology does enable is the ability for the retailer to engage with customers how, where and when the consumer wants. If you want to read about the conclusions that our lunch-time guests came to about the topic then read this report.

To app or not to app - that is the question!

Mark Carpenter — Fri, 11 Mar 2011 15:01:15 GMT

Should retail businesses invest in developing an app or stick to improving their website?

I recently attended a summit on multichannel retailing. As predicted, mobile was a topic that came up again and again. It seems to be a bit of a buzz word at the moment yet it was only a year ago that I could not make it through a day without out talking about end-to-end encryption. Now that The Logic Group has multiple solutions for reducing PCI through encryption and tokenisation, it seems that like the industry, my thoughts turn to ensuring our clients can capitalise on mobile transactions.

I have a number of Apple devices, so I am familiar with the enhanced user experience provided by an app, but web design is moving on in leaps and bounds. Sometimes optimised sites for smaller mobile screens can be as good as an app, yet have a wider reach than just Apple’s iOS. This brings me back around to the multichannel summit. Except those who have already invested heavily in app design, the priority of retailers, and confirmed by experts was to stick with enhancing the website rather than invest on an app!

At first I was surprised by this, but as I related this information back my own consumer behaviour, I realised that buying from the web - in any form factor - is the most familiar and identifiable method of searching and selecting items. I only use an app for purchases with one single-channel retailer - and that is more about customer experience, rather than getting the best deal. Most of the time I am researching across many websites before the final purchase. If I stick to only using apps to buy from my phone, I lose some of the ability to easily compare.

With a focus on optimising a website, the first advice to the audience at the multichannel summit, was to think about what is important to the potential shoppers. Do they want to check stock, reserve goods for collection, or complete full transaction from selection to payment? Many of the main websites we interact with from our computer have innovative and engaging ways to draw us in. Let's not forget that this has grown over more than 10 years of constant evolution. As the cliché goes, do not think that we can run before we can walk with mobile transactions, but there are many lessons and experience we can draw on from the web.

In the last year, the gap between the experience offered by a dedicated app and a well thought out website are narrowing, and I am beginning to come around the advice from the experts. Stick with the web, and if your CXO or Marketing department insist on an app - then just point it at the optimised website, and sleep easy that all bases are covered!

When PCI DSS compliance is not enough

Luben Solev — Tue, 22 Feb 2011 09:12:00 GMT

You are a retail business. You have spent a small fortune in time and money to upgrade your systems and have now achieved that holy grail – PCI DSS compliance. Do you sit back and relax, safe in the knowledge that you have achieved security nirvana and that fraud will never show its ugly face in your business again? Well not quite.

PCI DSS compliance has its limits

The issue is that PCI DSS compliance by its very nature can’t be all-encompassing. It deals with payment data (credit, debit, payment, pre-pay etc.) data and the flows of this information through your business. Anything not directly related to credit and debit card data is considered out-of-scope. After all, the PCI DSS standard was created by the likes of VISA, MasterCard, Amex, DiSCOver and JCB, so naturally their key priority is in keeping payment data safe and secure.

But recent technology developments demonstrate that fraud (like water) always seeks the least path of resistance and does not differentiate between in-scope and out-of-scope areas of a business. A recent story beautifully combines payment, loyalty and fraud with a dash of new technology and a pinch of sub-standard implementation to show us the limits of achieving PCI DSS compliance.

Starbucks Rewards

Starbucks have recently introduced iPhone and Blackberry Apps for their Starbucks Card Rewards loyalty program. All you do is launch the App in your smartphone, get the phone screen (showing a barcode) scanned by the StarBucks employee and enjoy your tall skinny extrawhip half-caf double caramel macchiato. The App does the rest, as it is matched to your account, which in turn is matched to your credit/debit card details. Thus money is taken out and loyalty points are added in automatically. Simples!!

The issue arises from the fact that the barcode in question is not of the dynamically generated variety, but is static and valid for the life of your Starbucks Card Rewards loyalty membership. This means that if someone else got hold of this barcode, they too could get free coffee on your account. But how is this done?

The Scam

The scam is technically reasonably simple to pull off. All the miscreant needs is you have access to an unsecured (i.e. not pin or pattern protected) smartphone of a mark for at least 90 seconds. All the fraudster then needs to do is:

Launch the app
Hit the mobile equivalent of “print screen”
Send themselves the resulting screen grab via email or mms
Delete the sent MMS or email from the sent folder to erase any trace of the subterfuge
Replace the handset to where it was found

From then on, all the criminal needs to do is load the image onto their phone and get that image scanned at the till, so that they too get to enjoy watery coffee, cakes and whatever else Starbucks sells on the bill of the unaware victim.

Much a do about nothing

But wait I hear you cry, there are a lot of caveats to pulling off this ruse. The smartphone needs to be unprotected (e.g. no password), it needs to be left alone in a public place for at least 90 seconds, the ne’er-do-well needs to have a phone with an identical resolution screen….and all of this for some free coffee. Many of you will correctly point out that most fraudsters probably won’t bother to go to all of this effort for such a small reward.

And you may well be right. Yes the scam does have severe limitations, but it does demonstrate that companies do need to take care in introducing new technologies in order to minimise the chances of fraud. After all, as the above app does not store or disclose any payment information it does not contravene the PCI DSS compliance status of the company. But that does not make it fraud-proof.

Micropayments - The next serious growth industry?

Paul Russell — Fri, 04 Feb 2011 14:30:28 GMT

Having recently attended a breakfast briefing in London on the subject of micropayments, I was fascinated to learn that the market opportunity for micropayments is forecasted to grow to €15bn by 2015! A massive growth from today’s estimates of €6bn, considering that most other markets are either flat, or showing minimal growth. The reason for this unprecedented growth? Our insatiable demand for digital content, whether it is online news articles, music downloads, mobile applications or online gaming to name but a few.

So how are savvy businesses that operate in the digital world going to capture a large share of this growth? Simple. They need to ensure that they sell something of perceived value for next to nothing, sell it to millions of people, as often as they can, whilst ensuring that the economic and user experience problems that are present today are addressed.

For micropayments to really work well, from a user perspective, a decision to buy something must be of such insignificant value that no real thought process is taken toward the impact on the wallet. In doing so, the user experience for payment must be as slick as possible. Users must not be delayed by having to go through the time consuming process of entering (and therefore thinking about) payment card details and passwords in order to complete the payment. Obstacles in the way of making a payment will force the consumer to question their decision to buy in the first place and will have a negative impact on conversion rates.

As the user experience is key to the success of micropayments, businesses will need to provide widely accepted, secure and easy to use payment methods, in line with the product they offer and the buying preferences of the consumer.

As we are still in the early stages of the evolution of micropayments, the next five years will see many initiatives from content providers looking for the right business model driven by consumer payment preference to land them a large slice of the market.

We watch with interest.

Mobile payments – evolution not revolution?

Neil Cook — Tue, 11 Jan 2011 17:27:51 GMT

As the global economy slowly emerges from the downturn in what is becoming an ever more aggressive marketplace, organisations are seeking to gain that all important edge over their rivals, with many once again turning to technology to help maximise their competitive advantage.

At the turn of the century it was the rise of the internet and e-commerce that led the way in providing businesses with a new channel to market to compete against, or complement, the already well established retail outlet and call centre channels. In the new decade many are looking at the rise of mobile technologies, through the development of contactless, smartphones, and tablets to drive consumer demand for mobile commerce and mobile payments. However, as with all early technology advancements one solution doesn’t fit all and there are a plethora of technology options developing through numerous pilots to allow early adopters to test the market place. With countless technology manufacturers, systems integrators and service providers touting their wares and jostling for position it’s no wonder organisations are struggling to know where to start. So what’s it all about and haven’t we been here before?

For those of us with long memories the hype around mobile started at the turn of the century with analysts and experts predicting dramatic growth in m-commerce and m-payments. In 2002 Mobile Monday predicted that the m-payment market would rise from virtually nothing to over $55bn by 2006, however, despite this hype dramatic growth did not materialise and in 2006 Mobile Monday revised their prediction dramatically suggesting a far slower growth rate to circa $10bn by 2010. In contrast Informa Telecoms & Media were far bolder in 2009 forecasting that by 2013 almost 300 billion transactions, worth more than US$860 billion, will be conducted using mobiles!

Despite these strong growth predictions mobile payment has remained an undelivered promise for the best part of a decade and is still proving to be quite elusive, but why?

Investigations suggest the reasons for this are based on a number of factors. At a basic level the lack of a clear definition and understanding of what m-payments really means is limiting cooperation and standardisation across the industry. Looking logically there appears to be five main areas for the use of a mobile phone in the context of a financial transaction (m-banking, m-order, m-delivery, m-authentication and of course m-payment,). By using the term m-payment to encompass all non payment functions dilutes and confuses the individual needs of each function often resulting in requirements not being adequately identified or met.

The lack of cooperation and standardisation (mentioned above) becomes clearer upon closer inspection of the m-payments stakeholder map, which comprises of six parties – the financial institutions, the mobile network operators (MNOs), the technology providers, the handset manufacturers, the merchants and the consumers. Of these the financial institutions and the MNOs are the primary forces leading the development of m-payment solutions for both merchants and consumers. However, these two parties are struggling to agree on a number of key issues including: who owns the customer; the location of the secure payment element (i.e. MNOs want the secure element on the phone SIM to lock the customer to the network, while the financial institutions want the secure element to be separate from the phone SIM to allow the customer to choose which MNO they want to use); the revenue sharing model, and; branding in a cooperative environment. Consequently, competing and contrasting pilots and trials are being driven and promoted by both stakeholder groups, which when combined with the various technological choices available makes merchant and consumer choice highly confusing and complex.

Although “mobile” is regarded as a single channel it incorporates a number of different technologies that can and are being used to develop m-payment solutions in an m-commerce environment. These key technology choices include: contactless (using Near Field Communication technology); SMS (text messaging pervasive throughout the mobile world); USSD (Unstructured Supplementary Service Data - a network dependant capability of modern GSM networks usually associated with real-time messaging or prescriptive menu driven interactions); mobile internet (initially via WAP and now more commonly via full web access through a mobile browser), and; traditional voice communications (including automated IVR type services as well as live agent interaction). Used in isolation or in combination these technologies open up a plethora of m-commerce and m-payment options.

So where do consumers and merchants go from here? By 2013, Gartner predicts that mobile phones will overtake PCs as the most common Web access device worldwide and by 2014 over 3 billion of the world’s adult population will be able to transact electronically via mobile or Internet technology. So, from a consumer perspective mobile is here to stay and is now rooted as a necessary every day piece of the customer interaction puzzle. From the increasing numbers of m-commerce and m-payment initiatives being developed and deployed across most market sectors today it also appears some merchants are already grasping the nettle to gain experience and competitive advantage by enabling anytime, anyplace, anywhere access for customers. So despite the difficulties, complexities and options it appears that now is the time to start evaluating and setting mobile strategy as part of an integrated multichannel strategy that delivers consumer benefit and competitive advantage and not just technology for its own sake.