AutoID & Data Capture Blog

5G Edge Infrastructure Market Growing Rapidly Ahead of Standardization

New Kid(s) On the Payment Block

Around this time last year, we introduced you to mFoundry and its digital wallet & vCard solutions, heralding an entry into the plastic-less future of commerce. Starbucks (SBUX), one of mFoundry’s premier customers since 2009, recently announced a nationwide rollout of its consumer mobile payment initiative, extending to all of its 7,500+ stores/outlets. Loyalty card holders with Smartphones can now pay for their purchases at these locations via a 2D barcode displayed on the mobile screen that is scanned at the point-of-sale using Honeywell 2D barcode scanners. This new scan-and-go capability at these stores promises to quicken the check-out process while potentially lowering investment in point-of-sale peripherals such as payment terminals. And most importantly, this alternative payment method manages to effectively engage today’s increasingly technology-savvy consumer base and enhance their overall experience while also pitching SBUX as a technology-forward organization.

Mobile barcoding has been around for a while. For instance, one of the nation’s largest retailers, Target, rolled out a scannable mobile couponing initiative in 2010 allowing its customers to receive exclusive offers directly on their mobile phones and redeem them by scanning a barcode on the phone at checkout. Barcode technology suppliers are increasingly targeting this emerging, high-growth market segment with optical scanners designed to effectively read barcodes from a mobile (eg. Motorola's DS4208 & DS9208 and Honeywell's Genesis™ 7580 & Xenon™ 1900).

The general consensus among many of the payment processing and telecommunication industry stalwarts has been that NFC (Near-Field Communication) is poised to be the next evolutionary platform for contactless payment. Why then did SBUX choose 2D barcodes over NFC? There are several reasons:
• SBUX already uses a mobile couponing program, so the extension to another mobile barcode application is not a significant undertaking
• Barcode scanners are readily available and at a much lower price point – these are less capital intensive and scanners can be used to support multiple applications
• There are a very-limited number of consumers with NFC-equipped devices (especially in the US)
• Deploying NFC infrastructure into each store would require significant capital and serve a very limited customer base

But let’s be clear – SBUX does not appear to be writing off NFC. Their decision to use a barcode system is most likely an interim alternative until NFC adoption gains traction … and it’s well on its way. Support for NFC is foremost on the minds of most of today’s leading Smartphone and mobile device developers. For example:
• All Nokia Smartphones shipped in 2011 will be NFC-equipped
• Google’s next version of Android is expected to include NFC-based tap-and-pay functionality
• The next-generation of the Apple iPhone and iPad are rumored to have integrated NFC
• RIM is evaluating NFC for the possible inclusion in one or more of its BlackBerry models
• Contactless payment infrastructure – which NFC can leverage – is being deployed at a rapid rate and end users are becoming more comfortable with the solution. VDC predicts that revenue from contactless payment hardware deployments will grow in excess of 40% over the next 3-5 years.

And this bodes especially well for payment terminals suppliers who now have their task cut out for them. The need to rapidly innovate and future-proof product offerings to reflect changing end-user requirements are expected to drive development initiatives for this automation technology in 2011.

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