A Forrester Research report analyzes the early successes and failures of Apple’s mobile payments system.
Samsung’s Galaxy S4 smartphone links mobile phones and bar code scanners.
Clipping paper coupons and remembering to bring them to the store is a hassle for many consumers. That hassle could be overcome if consumers could instead download coupons to their phones and flash them to the bar code scanner at a retail store checkout counter. The problem is that the laser scanners retailers typically use can’t read the screen of a mobile phone. Samsung’s new Galaxy S4 smartphone has a solution that may make it easier for consumers to use their phones as mobile payment and commerce devices.
The Galaxy S4, to be released in April, overcomes the laser scanner hurdle by enabling the phone to send data by pulses of light to conventional bar code scanners. Developed by Mobeam, the technology enables compatible apps developed for the Galaxy S4 to translate coupons, loyalty cards, gift cards and payment card data into the conventional one-dimensional bar codes that appear on consumer packaged goods. Retailers with the standard laser scanners designed to read 1-D bar codes would not need to purchase new equipment for consumers to use the Mobeam technology.
Some retailers, notably Walgreen Co., have installed new equipment, optical scanners, so they can can read two-dimensional bar codes, including QR codes, from smartphone screens. Optical scanners can read 2-D bar codes regardless of whether they are located in an app or an e-mail.
Mobeam’s technology uses light sources built into smartphones to generate the code, which mimics the black-and-white sequencing of a standard bar code, says Marcia Donner, Mobeam chief operating officer.
Instead of reading the reflection from a printed bar code, laser scanners receive identical information from pulses of light, she says. That means existing laser checkout scanners require no upgrades for use with apps that rely on Mobeam’s technology, she says. “The light source can be any LED already on the phone, such as a message-waiting indicator, a charge indicator or the infrared LED used in proximity sensors,” Donner says.
Other types of mobile commerce technologies that use two-way wireless communication between devices, such as Near Field Communication, require compatible readers that many retailers do not have. Other bar code schemes, such as Quick Response codes that use 2-D technology, require optical scanners, not the much more common laser scanners. One technology, Zoosh, uses the speaker and microphone on a mobile device to create an ultrasonic connection.
Mobeam itself will not provide the app that uses its technology. Instead, app developers and handset makers can license the technology, Donner says. Mobeam has not disclosed which apps using its technology will be available on the Galaxy S4’s release.
A retailer could incorporate Mobeam into its app. “Imagine going to a supermarket,” Donner says. “You have a loyalty card for your local retailer, coupons and a gift card. Before you go, you load a couple of coupons and a $25 grocery gift card to your supermarket loyalty card via their app. You walk down to the store and pick out the products for which you've loaded coupons. You head to checkout and when you pay, you redeem your pre-loaded coupons by opening the app, accessing the coupon, pressing on the bar code and pointing your Mobeam-enabled phone at the flatbed scanner. When you’re ready to pay, you beam your gift card, also by pointing your phone at the scanner, and receive $25 off since you already preloaded the card to the grocery store app.”
Mobeam’s inclusion on the Galaxy S4 is a big step for the light technology vendor, says Rick Oglesby, senior analyst at financial services consulting firm Aite Group LLC. Because Mobeam’s technology works with nearly ubiquitous 1-D scanners, there should be opportunities for retailers and app developers, he says.
“We will still have NFC versus 2-D bar codes versus Mobeam versus Zoosh versus Bluetooth versus others,” Oglesby says. “That being said, consumers need availability in order to adopt, so I’d say that’s where Mobeam has an opportunity with Samsung.”
Compatibility with 1-D bar code scanners is a plus, says Richard Crone, principal at payments consulting firm Crone Consulting LLC. But he cautions that the Mobeam technology will be offered only on one smartphone. Google Inc. encountered a similar issue when it released its mobile Google Wallet two years ago. Initially, it only was available on one wireless network; it has since expanded to four networks.
Crone also says that retailers will favor a mobile commerce scheme that provides information about when a consumer views a mobile offer, downloads it or redeems it, all of which Mobeam enables, the company says.
“The only real difference is that instead of keeping wads of paper or plastic cards, you’ll store offers in an app on your phone, or even use them from e-mails,” says Donner of Mobeam.
Mobeam anticipates a vast opportunity to market its app. Analysts say Samsung may sell as many as 200 million Galaxy S4 phones over the next 36 months, Donner says.