North American Bancard Blog

Beyond NFC: Mobile Payments and Beacons

Posted by Nancy Bakanowicz on

beaconsWe are just getting used to the idea of paying for goods and services with our phones, when along comes another potential non-card and non-cash way to pay – beacons. Bluetooth low energy-based (BLE) beacons are responsible for the messages you get on your phone about sales and specials from stores and restaurants as you walk past them. This is known as proximity marketing, and BLE beacons are allowing merchants to send offers, promotions, coupons and more in the form of proximity messages. But there are some experts who are wondering if BLE beacons can be used to enable proximity payments.

Point-of-sale proximity payments use beacon technology to enable payments via NFC, such as Apple Pay, but also through Bluetooth and W-Fi, creating a convenient, frictionless customer payment environment. These multiple payment options also benefit retailers, as they not only open the contactless payment environment beyond NFC, but they are also cheaper and faster, which means shorter checkout lines and wait times at wrap stands.

Most smartphones on the market today support BLE beacons, although the customer must turn on the Bluetooth signal on her phone in order to receive signals from a beacon. BLE beacons have an approximate range of 70 meters, and all BLE enabled devices within that range can receive the signal.

Making a proximity payment via BLE beacons is not much different than other ways to pay. When a customer enters a store, the payment app on her phone identifies the beacon signal and alerts the store’s POS system of the customer’s presence. Any purchases made will be posted to the customer’s mobile payment account, which the merchant can see on the POS system. BLE beacons also allow for self-checkout, so the customer is able to scan the item and pay on her own requiring no interaction with store personnel. These transactions may require PIN approval before leaving the store.

Unlike other newer forms of payments, there are no new habits for customers to learn with proximity payments. Proximity payments made through BLE beacon payments would be more of a passive experience for the customer, rather than a user-initiated one, meaning the customer doesn’t necessarily have to do anything to make BLE beacon payments work, other than opt-in to receiving the signals on her phone. And, as an added benefit for merchants, adding proximity payments to the payment choices does not require any new or additional POS changes.

One of the biggest advantages of proximity payments using BLE beacons is the freedom it gives the customers. It allows them to connect to a POS terminal from wherever they are in the store, eliminating the necessity to stand in long lines at the wrapstand. Imagine how handy proximity payments would be on Black Friday, if customers could check out from anywhere in the store. Of course, there are disadvantages, too, with one of the biggest being the investments in the physical beacons that the merchant would need to make in order to implement this form of payment.

There is also the question of security, as BLE beacons allow transactions over much longer distances than does NFC, so there is the potential for lack of visual security if the customer is out of sight of the POS when her phone interacts with the beacons. The longer range of the transaction also raises the likelihood of interference. But, according to an article by David Fernandez on the Mobile Marketer website, proximity payments are more secure than even NFC payments. “A point-of-sale proximity payment is inherently more secure than even Apple Pay as it can avoid credit cards altogether, meaning tokenized cards details do not need to be held in a payment database – a theoretical weak link in Apple Pay,” Fernandez said. “Payments are taken directly from the payer’s bank account, with the ability to check the balance before making the payment,”

Proximity payments via BLE beacons are expected to grow in the next few years, so they are likely here to stay. However, in order for grow, brands will need to get shoppers to download an app, opt-in to receiving messages in store, and turn on the Bluetooth function on their smartphones to receive the messages. But as retailers look for ways to enhance the in-store experience, BLE beacons will be utilized more frequently among more merchants.

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