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March 21 2013

Commerce Weekly: The lucrative art of tracking shopper behavior

Snooping on shoppers pays off

Liz Gannes took a look this week at how online retailers’ desires to track consumers’ shopping habits are resulting in emerging startups offering services to track various behaviors on behalf of retailers. In a post at All Things Digital, she highlights newly launched startup Sift Science, which tracks online shopper behaviors to uncover fraudulent activity, and Commerce Sciences, a startup in beta that offers online retailers a Personal Bar for their websites that uses behavioral science to increase online sales.

Gannes outlines a few interesting insights each company has gleaned from aggregating consumer shopping data. For instance, Sift Science has found that a shopper who types her last name in all caps is 5.6 times more likely to be a fraudster, and shoppers who don’t sign in with a Facebook log-in are four times more likely to be fraudsters. Early findings from Commerce Sciences include using the word “free” — as in “you have won a free coupon” as opposed to “you have won a coupon” — increases sales by 15%, and social influences from displaying what a user’s friends liked and bought had zero effect during the day but resulted in 49% more sales in the evening. You can read Gannes’ report at All Things Digital.

In related news, it turns out Facebook ads are strongly influencing the platform’s users’ buying habits, even if they’ve never ever clicked on an ad in Facebook. Farhad Manjoo reports at Slate on in-depth studies conducted by Facebook showing that ad clicks don’t matter. He reports:

“‘On average, if you look at people who saw an ad on Facebook and later bought a product, [fewer than] 1 percent had clicked on the ad,’ [Sean Bruich, Facebook's head of measurement platforms and standards,] says. In other words, the click doesn’t matter; people who click on ads aren’t necessarily buying, and people who are buying are almost certainly not clicking.”

More notable, however, might be the way Facebook is managing to gather this data. Manjoo notes that last year, Facebook partnered with consumer data aggregator Datalogix, which tracks the purchasing behavior of more than 100 million U.S. households by tying consumer identities to their purchases through store loyalty cards. Manjoo writes:

“Over the past few months, Facebook and Datalogix figured out a way to match their respective data sets in a manner that maintains people’s privacy … Facebook can now tie its users to the stuff they buy at supermarkets. Armed with this data, Facebook began running a series of analyses into the effects of advertising campaigns on its site. If, say, Procter & Gamble ran a Facebook ad for Tide, Facebook could look at Datalogix’s data to see whether people who were exposed to the ad tended to purchase more Tide in the weeks after the campaign.”

Manjoo looks at the differences between direct-response and demand-generation marketing, and compares Facebook’s ad practices with TV advertising. You can read his report at Slate — it’s this week’s recommended read.

Retail struggles to remain relevant

The days of the traditional retail mall are numbered, according to experts at this year’s MIPIM trade fair in Cannes. Tom Bill reports at Reuters that property experts at the show explained to him that “[m]alls must become more like full-service community centers to survive in the face of a growing list of failed retailers” and that European malls are looking to add such tenants as hospitals, art galleries, education centers and government offices in order to offer services that can’t be found on the web.

Christian Ulbrich, chief executive for Europe, Middle East and Africa at property consultant Jones Lang LaSalle, told Bill that shopping no longer provides enough of a reason for consumers to go to shopping centers. “Stores will get bigger and become more like adventure parks that attack all of your emotions,” he said. “For example, Globetrotter has a climbing wall and cycle track in its Frankfurt store to try out its products.”

In related news, the Kate Spade brand is doing its part to reinvent retail for the future consumer. Mark Wilson reports at Fast Company that the Kate Spade flagship store in Japan is experimenting with the lean startup concept.

The store teamed up with Control Group to digitize its new campaign that offers customers espresso to encourage them to linger and launches a new product every Saturday that can’t be found anywhere else. The Control Group outfitted the store with digital iPad signage that engages customers and allows them to interact with the store’s displays. The cloud-based set up also allows the store to track customer response. Colin O’Donnell, a partner at Control Group, told Wilson:

“They can see sales corresponding with a change. So you can do A/B testing seeing how you drive consumer behavior. Using those web analytics in the real world is a super exciting place to be.”

“With a lean startup mentality, Kate Spade doesn’t need to prognosticate the habits of their customer base,” writes Wilson. “They can hypothesize, test that hypothesis, and refine over time.” You can read Wilson’s full report at Fast Company.

Starbucks’ struggles with Square illustrate challenges all mobile wallets face

The Starbucks partnership with Square that launched late last summer might not be going as well as either company had hoped. Austin Carr reports at Fast Company this week that he and other writers and freelancers at Fast Company have been experimenting with the Square-Starbucks partnership in the wild, and the results were inconsistent at best. Carr writes:

“At worst, the service simply did not work. On average, however, the user experience was buggy and awkward, with Starbucks employees seemingly more confused about how Square works than their own customers. Our evidence is anecdotal — and our sample size small — but the results of our tests are telling, especially given the reputations Starbucks and Square have for customer service. It serves to show that however refined a user experience might be on a local level, scaling such a streamlined UX all at once is borderline impossible.”

Harry McCracken commented on Carr’s post in a piece at Time’s Techland, noting that the service worked well for him in tests at independent businesses last year, but the situation is a bit different at Starbucks because Square is integrated with Starbucks’ POS system and requires a QR code to be scanned. He adds that Carr’s experience is a “sobering reminder” of how difficult the transition from credit card to mobile wallet is going to be. “Plastic may be boring, but it’s universally accepted, it’s understood by both consumers and businesses — and it just works,” he writes. “That isn’t yet true of any of the challengers which are trying to render it obsolete.”

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February 14 2013

Commerce Weekly: You can now buy stuff with tweets

American Express turns Twitter into an ecommerce platform

American Express announced an enhancement this week to its Sync with Twitter feature — users can now buy things with a tweet. Tricia Duryee reports at All Things Digital that all users will need to register to participate, even previous users of the sync feature, in order to provide a delivery address for purchased items. Once registration is complete, Duryee says, the purchasing process is pretty straightforward:

“For instance, participants will be able to buy a $25 American Express Gift Card for $15 … by tweeting #BuyAmexGiftCard25. American Express will reply via Twitter, asking the user to confirm the purchase in a tweet. All products will be shipped via free two-day shipping.”

Duryee reports that more items have been added since the launch and deals will be offered for three-week periods.

American Express SVP of digital partnerships and development Leslie Berland told Duryee that Twitter is just the beginning — the service will eventually be offered on other platforms, such as Facebook.

While fun and novel for consumers, Forbes’ B. Bonin Bough notes the value of the ecommerce partnership for participating retailers: “Having customers promote brands while buying them is a win-win situation,” he said, “and could potentially lead to incredible results — that is, if AmEx and Twitter can get this new purchasing behavior to catch on with consumers.”

Purchasing behavior may not end up being the ultimate obstacle, however. Angel Djambazov at GeekWire took a look at the potential security issues of the program, noting that “security has never been Twitter’s strong point. The platform is rife with phishing.”

Could 3D printing bring down retail?

The ForeSee Mobile Satisfaction Index: Holiday Retail Edition was released this week. The survey of more than 6,200 shoppers reviewed the consumer experience during the 2012 holiday shopping season.

One of the highlights of the report addressed the trend of showrooming. Eric Feinberg, senior director of mobile at ForeSee and co-author of the report, said for the press release, “Customers are using their mobile phones as integrated parts of their shopping experience … Mobile is the ultimate companion channel, making showrooming as much of an opportunity as it is a threat.”

But it’s not as big an issue as some retailers may think. Commenting on the report, ForeSee president and CEO Larry Freed told Chantal Tode at Mobile Commerce Daily:

“The idea that everyone is going to be looking at Amazon’s app when they are in Target and Walmart is proving out not to be true, and I think retailers need to continue to focus on providing a great integrated experience between that phone and that retail environment so that there is a value add for a consumer when they are in Target to go to Target’s app or site instead of going to Amazon’s.”

Fretting over showrooming may be a bit shortsighted on the part of retailers, however — the real concern for the future of retail may have more to do with 3D printing. Dalton Caldwell took a look this week at a recent statement by Marc Andreessen that the chain retail model is “a fundamentally implausible economic structure,” arguing that few stores “can survive a decline of 20 to 30 percent in revenues.”

Caldwell says he isn’t sure he agrees with Andreessen’s prediction, but that “[i]f we accept Andreessen’s argument that most retail companies could be put out of business by a 20-30% decline in revenue, 3D printing could be plausibly be the vector by which this scenario is manifested.” He points to items such as toys and sports equipment, and home improvement items such as plastic drywall anchors.

Not everything can or will be replaced by 3D printing, Caldwell notes, but taking the things that can into consideration along with retail stores’ “revenue sensitivity caused by debt” might just lead the future Andreessen predicts. You can read Caldwell’s full piece on his personal blog.

Pay at the pump gets PayPal

PayPal announced this week that through its partnership with retail petroleum company Gilbarco Veeder-Root, it now will offer mobile payments at the gas pump.

“The initial effort will launch the PayPal payment capability to retailers with Passport point-of-sale (POS),” Lucy Sackett, director of outbound marketing for Gilbarco Veeder-Root wrote in a press release. “Future developments will bring PayPal solutions to Gilbarco’s growing suite of media and merchandising applications.”

Sarah Perez at TechCrunch notes the impact of the Gilbarco deal, reporting that “the 150-year old Gilbarco currently works with 19 of the top 20 convenience store operators in the U.S.” and that company “has installed over 30,000 POS systems across North America which will now see PayPal integrations.”

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October 26 2012

Four short links: 26 October 2012

  1. BootMetro (github) — website templates with a Metro (Windows 8) look. (via Hacker News)
  2. Kenya’s Treasury to tax M-Pesa — 10% tax on mobile money-transfer systems. M-Pesa is the largest mobile money transfer service provider in Kenya, with more than 14 million subscribers. [...] It is estimated that M-Pesa reports some 2 million transactions per day. [...] the value of money transferred through mobile platforms jumped by 41 per cent in the first six months of 2012. Neer mind fighting you, you know you’re winning when they tax you! (via Evgeny Mozorov)
  3. Digital Divide and Fibre RolloutAs the group of non-users gets smaller, they are likely to become more seriously disadvantaged. The NBN – and high-speed broadband more generally – will drive a wave of new applications across most areas of life, transforming Australia’s service economy in fundamental ways. Those who are not connected in 2015 may be fewer, but they will be missing out on far more – in education, health, government, commerce, communication and entertainment. The costs will also fall on service providers forced to keep supplying expensive physical and face-to-face services to this declining number of people. This will be particularly significant in remote communities, where health consultations and evacuations by flying doctors, nurses and allied health professionals could potentially be reduced through e-health diagnostics, and where Centrelink still regularly sends teams out to communities. As gov2 expands and services move online, connectivity disadvantages are compounded. (via Ellen Strickland)
  4. Smart Body Smart World (Forrester) — take note of these two consequences of Internet of Things and Quantified Self: Verticals fuse: “Health and wellness” is not its own silo, but is connected to our finances, our shopping habits, our relationships. As bodies get connected, everyone is in the body business. Retail disperses: All retailers become computing retailers, and computing-specific retailers like Best Buy go the way of Blockbuster. You wouldn’t buy a smart toothbrush at a specialty CE store; you’d be more likely to buy it in the channel that solves the rest of your hygiene needs. (via Internet of Things)

October 18 2012

Commerce Weekly: Targeting Amazon

Here are a few stories that caught my attention in the commerce space this week.

Strategic maneuvers aimed at Amazon

Best Buy LogoBest Buy LogoRetail competition against Amazon is starting to heat up coming into the holiday shopping season. On the heels of Wal-Mart’s recent moves to square off against Amazon, two other big box brick-and-mortar retailers have announced strategies targeting the Internet retail giant.

Ann Zimmerman reports at The Wall Street Journal that Best Buy not only will price match with Amazon this holiday season, but will also offer free delivery for products that are out of stock. Target has its sights set against Amazon as well. In a report on Target’s planned holiday strategy, Natalie Zmuda at AgeAge notes that tactics include “a price-match guarantee against a group of competitors that includes popular online retailers such as Amazon.” Target also is using QR codes in its holiday campaign to combat “showrooming” on the top 20 selling toys.

In somewhat related news, the US Post Office also is making moves into the e-commerce market. Victoria Stilwell reports at Bloomberg that starting in November, the US Post Office will begin testing its same-day delivery program, called Metro Post, in the San Francisco market. The service is aimed at local physical retailers, which could in turn give them a leg up against Internet retailers like Amazon. Stilwell reports that to participate in the Metro Post test, retailers need 10 or more physical locations throughout the US, with one or more within the test market boundaries.

Square exits taxis

New York City’s Taxi & Limousine Commission (TLC) spokesman Allan Fromberg this week unequivocally dismissed rumors from last week that Square was negotiating an official partnership with TLC, alongside news that Square has ended its pilot payment program with the TLC.

Garett Sloane at The New York Post reports that a letter (PDF) sent by Square’s general counsel Dana Wagner to the TLC on Friday “indicated that [Square] needed to overhaul its payment system in light of new rules the commission is drafting to govern credit-card payments in cabs.” Wagner writes in the letter:

“Square has determined, in light of developments in prospective taxicab regulations in New York and other markets, and based on what we have learned conducting the Pilot Program to date, that we wish to pursue a different hardware and software solution for our TPEP [taxicab passenger enhancement project] offering. It would be commercially unreasonable for Square to pursue a new hardware and software solution for a future TPEP offering while at the same time continue to support the software and hardware solution we rolled out in the Pilot Program.”

Ryan Kim at GigaOm says it’s likely that Square will continue working on a taxi-payment product, quoting Wagner’s letter: “… Square looks forward to further improving our product and making commerce and transportation easier for millions of riders and drives in New York and around the country.”

In other Square news, company CEO Jack Dorsey announced that Square would no longer refer to its customers as “users” and appealed to others in the technology industry to follow suit. He writes in a blog post: “The word customer, given its history, immediately sets a high bar on the level of service we must provide, or risk losing their attention or business.” His post includes a letter he sent to his team that explained: “We don’t have users, we have customers we earn. They deserve our utmost respect, focus, and service.”

Isis is gearing up for launch

Google Wallet competitor Isis is finally gearing up to launch its wallet, after a series of delays this summer. The company confirmed it would officially launch in the Austin, Texas and Salt Lake City, Utah markets October 22.

Nathan Olivarez-Giles reports at Wired that the Isis mobile app has shown up in Google Play, but notes that the Wired team had yet to find a compatible phone. Isis head of marketing Jaymee Johnson told Olivarez-Giles, “By year end, as many as 20 Isis-ready handsets are expected to be in market …We look forward to sharing more details on Oct. 22.” Those details likely will include partnering retailers as well. Isis announced partners in May, but as Olivarez-Giles notes, it’s not yet clear which ones will be part of the initial launch.

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September 20 2012

Commerce Weekly: Big data in retail

Here are a few stories from the commerce space that caught my attention this week:

Mom and pops sidelined by big data?

Gary Hawkins at the Harvard Business Review took a look this week at marketing and research in the commerce space and argued that the costs associated with big data advantages may be wiping out the little guy. Hawkins writes:

“In this war for customers, the ammunition is data — and lots of it. It began with transaction data and shopper data, which remain central. Now, however, they are being augmented by demographic data, in-store video monitoring, mobile-based location data from inside and outside the store, real-time social media feeds, third-party data appends, weather, and more. Retail has entered the era of Big Data.”

Hawkins points out that this level of consumer intelligence is highly advantageous and even more expensive, thus only retailers with adequate resources (read: deep, deep pockets) can compete. Citing a study (PDF) by the Grocery Manufacturers Association, he notes that “annual industry spending on shopper marketing at over $50 billion, and growing.”

In addition to sidelining smaller retailers, the shopper marketing trend is having a more pervasive effect on the industry as a whole by changing the distribution of budgeted marketing expenditures. “Trade promotion accounted for 44% of total marketing expenditures by manufacturers in 2011, lower than any other year in the past decade,” Hawkins notes. The reason for the shift is all about the ROI — quoting Matthew Boyle of CNN Money, Hawkins writes that “the partnership of Kroger and dunnhumby ‘is generating millions in revenue by selling Kroger’s shopper data to consumer goods giants’ … It is widely understood that Kroger is realizing over $100 million annually in incremental revenue from these efforts.”

This model not only caters to large retailers over smaller retailers because of the size of their wallets, but because it’s easier for brands to interact with the corporate headquarters of a major retailer with 1,000 stores than to interact with 1,000 owners of independent stores, Hawkins writes. He goes into detail about how this business model will affect the industry on several fronts — you can read his piece in its entirety here.

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

NFC, a mess waiting to happen?

When Apple unveiled the iPhone 5 last week, the big news on the commerce front was the new device’s lack of NFC technology. After some time to mull it over, most are coming to the conclusion that it won’t be detrimental to Apple — or to mobile payments, for that matter. Brian Proffitt at ReadWriteWeb addressed the issue this week and argues that Apple will be just fine without NFC — you can’t really use it anyway, as NFC payments aren’t universally accepted. And with the expense and hassle on the part of the merchant in setting up for NFC payments, this form of payment is going to have to become far more ubiquitous to make it worth their while. Proffitt writes:

“NFC may afford some convenience to some customers, but if it doesn’t increase sales in a meaningful way it’s going to drop to a lower point on a business’ priority list. Getting more sales and customers is the big win, and NFC might not help with that when something like Passbook or other payment systems like Square could be implemented with less cost and hassle.”

Over at All Things Digital, Carey Kolaja, chief of operations for global product & experience at PayPal, took a look at this issue as well. She argues that NFC is a mess waiting to happen and asks why Apple would want any part of it anyway. Kolaja writes:

“No retailer will have multiple NFC boxes to take payments from different networks, and the NFC terminals shipping today do little more than just transmit the card number and transaction size. They’re not equipped to automatically accept the complex coupons and offers that make the digital wallet so exciting. On the technology side, carriers are trying one solution, phone manufacturers another, and technology companies yet another. Meanwhile, the consumer is standing at the register thinking ‘really, how hard is it to pull out my credit card?’”

Kolaja also defines “mobile wallet” and “digital wallet,” and explains why the terms are not interchangeable. She argues that, in the end, digital wallets will prevail over mobile wallets because “[r]elevance to the consumer will be king, and the ability to act in a seamless and secure environment across any device or platform will be what matters most to that consumer.” Her piece is well worth the read.

Mobile-empowered consumers are driving retail innovation

A new report released this week from MasterCard and the Economist Intelligence Unit showed that consumers are effecting change and innovation in the retail industry more than ever before. The report refers to this shift as “the era of the ‘I-Con’ — the smart, omnichannel, omnipotent consumer.” A couple highlights from the findings include:

  • “Data allows retailers to put the ‘I’ in I-factor”: data was voted the second most important factor in customer retention and in growing market share, as it allows retailers to better personalize services. “41% say they will use data to deliver an improved customer experience in the coming year.”
  • “Retailers are ramping up investment in new technology solutions to keep pace with customer demand”: 44% of retailers say they plan to offer contactless payment in the next year and 35% will invest to improve their e-commerce and m-commerce strategies and platforms.

Additionally, the study looked forward to 2020 and offered a few predictions. One notable highlight focused on mobile:

  • “Mobile commerce is predicted to become king”: 43% of retailers predict that mobile will become the most important channel for customer communication by 2020, ahead of brick-and-mortar stores and desktop PCs.

The findings echo study results from BigCommerce this summer that showed the exponential growth of e-commerce and m-commerce. The study results, visualized in an infographic, in part addressed the changing behavior of consumers and how mobile is driving those changes:


Click for the full infographic.

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August 09 2012

Commerce Weekly: Starbucks gives Square’s mobile payment a big push

Here are a few stories that caught my attention in the commerce space this week.

Square gets Starbucks, cash and Howard Schultz

SquareSquare announced a new partnership with Starbucks this week. Peter Ha at TechCrunch reports:

“Beginning this fall, Square will begin processing all U.S. credit and debit card transactions at participating Starbucks stores across their 7,000 locations. Pay with Square users will be able to find a nearby Starbucks in the Square Directory from their iPhone or Android smartphone.”

Ha notes in his post that as part of the partnership, Starbucks also is ponying up $25 million in series D funding for Square and offering up its CEO, Howard Schultz, to serve on Square’s board of directors.

Harry McCracken points out in a post at Time Techland the partnership will put Square in a much better position to compete on the mobile payment front. McCracken writes:

“At the moment, Pay with Square is accepted at around 40,000 locations — mostly neighborhood businesses such as independent coffee shops, restaurants and beauty salons. The agreement with Starbucks will put it in a major nationwide chain for the first time, and therefore puts it in closer competition with Google Wallet, which is already accepted at Home Depot, Office Depot, Starbucks rival Peet’s, Macy’s, RadioShack, 7-Eleven and other major merchants.”

Another important aspect of the agreement is that Starbucks will promote other local Pay with Square merchants “from within a variety of Starbucks digital platforms, including the Starbucks Digital Network and eventually the Starbucks mobile payment application.” As Ha notes in his post, “this catapults Square into the mainstream consciousness for the millions of drones who drop by their local Starbucks on the way to work.”

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

And the winner is …

There’s a lot at stake in the race to control the blossoming mobile commerce market. A new report from ABI research predicts that by the end of 2017, 24.4% of online revenue will come from mobile commerce. And given that the mobile device market is just starting to boom, that percentage is likely to increase.

Consumer goods analyst Austin Smith interviewed with Isaac Pino at The Motley Fool this week and declared eBay, Amazon and Google early winners of mobile commerce race.

Smith highlights several reasons for his choices. EBay, he notes, sells 8,000 cars per week on eBay Mobile, and he also points out that eBay’s PayPal division is expected to handle $10 billion in transactions next year. As for Amazon, Smith says the company recently saw mobile sales top $1 billion and pointed to its ever-growing ecosystem of tablets and a possible transition toward a phone. And for Google, Smith reasons that “there are very few companies out there that have as powerful data analytics as Google … virtually no company has better data about how you shop.”

Keeping itself in the winner’s circle for now, eBay announced this week that the eBay Now mobile app will allow shoppers to order products from local retailers, with same-day delivery (a service Amazon has also been rumored to be pursuing). According to a report at Reuters, eBay is testing the app with a number of retailers, including Target, Best Buy, Macy’s and Walgreens, in the San Francisco market. The report describes the consumer experience:

“Shoppers involved in the test can download the app onto mobile devices such as Apple’s iPhone and iPad, then search for products to buy from local stores in San Francisco. When they find a product, users press a ‘Bring It’ button and the order is sent to couriers. The courier closest to the product accepts the order, drives to the store to pick up the product and then delivers it to the shopper’s home. Customers pay when the product arrives.”

According to the report, the first three deliveries are free, and “after that, delivery is $5 for the test period, and the minimum order is $25.”

The secret to winning the mobile wallet race

Forrester Research senior analyst Denee Carrington has a new report out this week on the mobile wallet wars. In a post at Forbes, Carrington shares a few takeaways from her research, including the secret to winning the mobile wallet race:

“Winning wallets will be convenient to use, contextually relevant, with a compelling experience. Moving the needle on the adoption of digital wallets — particularly for mobile digital wallets — will require infusion of significant value throughout the purchase journey before, during, and after payment. Winning solutions will bring this to life through greater convenience, contextual relevance, and a compelling purchase experience.”

Carrington also takes a look at the market dynamics and competitive nature of the mobile wallet landscape, and argues that NFC wallets may not reign victorious in the end. Hardware-agnostic wallets face fewer hurdles and thus will enjoy faster adoption. You can read more of Carrington’s insights here and find her full report here.

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July 26 2012

Commerce Weekly: Square disrupts, PayPal shrugs

Here are a few stories that caught my attention this week in the commerce space.

The mobile payment war rages on

David Pogue took a look this week at Square’s latest maneuver in the mobile payment race, its Pay With Square app. Pogue says it’s far more disruptive than the simple ability for anyone to accept a mobile credit card payment:

“You walk into a shop or cafe. The cashier knows that you’re on the premises because your name and thumbnail photo appear on his iPad screen. He rings up your items by tapping them on the iPad.

“And now the magic moment: To pay, you just say your name. The cashier compares your actual face with the photo on the iPad’s screen, taps O.K., and the transaction is complete. No cash, no cards, no signatures — you don’t even have to take the phone out of your pocket.”

Writing about taking the app for a spin at a coffee shop in San Francisco, Pogue describes a few hang-ups: merchants have to use an iPad as a cash register and they must enter every item they sell. Another issue concerns Square’s security and actually stems from customers themselves — users are required to upload a photo of themselves to set up a new Pay With Square account, but as the coffee shop cashier told Pogue, “sometimes use pictures of cats or SpongeBob instead of their own photos,” which prevents a visual ID of the customer.

The mobile payment competition isn’t sitting still, however. Pogue also notes that PayPal is working to catch up with Square’s frictionless purchase technology with its own local payment system, PayPal Local. And at the recent VentureBeat MobileBeat conference, PayPal’s vice president of global product Hill Ferguson said he isn’t particularly concerned with Square. John Koetsier reports at VentureBeat: “Though [Square] can facilitate very personal commerce — put it on Bob’s bill — [Ferguson] says it is not going to work very well at Safeway.” Ferguson also acknowledged that PayPal is a “two-click” system, as it doesn’t own the ecosystem “like Google Play or Apple,” but says he sees both companies as “fantastic potential partners, doing highly complementary things.”

X.commerce harnesses the technologies of eBay, PayPal and Magento to create the first end-to-end multi-channel commerce technology platform. Our vision is to enable merchants of every size, service providers and developers to thrive in a marketplace where in-store, online, mobile and social selling are all mission critical to business success. Learn more at x.com.

NFC security hacked at Black Hat 2012

Andy Vuong at the Denver Post took a look at NFC technology this week, its potential uses — including but not limited to mobile payments — and the likelihood of it becoming mainstream in the U.S. Vuong writes that the biggest question concerning NFC’s future may be whether or not Apple will include the technology in its next generation iPhone.

Mohamed Awad, associate product line director for NFC products at Broadcom and a board member of the NFC Forum, told Vuong that he doesn’t think the future of the technology hinges on Apple’s adoption, and he also dismissed security concerns. Vuong reports:

“‘The credit card in your wallet is just magnetically encoded, so anybody with a magnetic reader can read all of your credit card information,’ [Awad] said. ‘On your smartphone, there is a secure element in there, the encryption is much more tight and it’s a much more secure platform.’”

The security concerns, however, may not be so easily discounted. Research consultant Charlie Miller demoed the security gaps at the Black Hat security conference in Las Vegas this week. Meghan Kelly at VentureBeat reports that Miller showed a video in which he closely followed a friend, keeping his hand “awkwardly close to his buddy’s back pocket” in order to hack his phone. Kelly says that though Miller noted the attack was difficult and that the NFC bugs he found are “not too extensive,” he was still able to exploit a bug in the Nokia N9 smartphone. She writes:

“The N9 has a feature in it called ‘pairing,’ which allows the phone to connect to other devices using Bluetooth and NFC. … If a hacker creates a tag that can pair the phone, she can have access to the Bluetooth network and eventually make it into the rest of the phone. Miller demoed the hack and pulled all the data from the phone, including the photos and address book. He also showed that you can send text messages to other phones using the hacked phone, as well as make calls.”

Kelly writes that Millers takeaway for the mobile security community is to “[m]ake phones prompt the user before accepting an NFC connection.”

Visa takes mobile payment to the Olympics

Bill Gajda, Visa’s head of mobile, brought some perspective to the state of mobile payments this week in an interview with Roger Cheng at CNET. Gajda says that though mobile payment experiments are underway, the mode of payment won’t become mainstream in the U.S. for two to three more years. Cheng reports that the issue isn’t only related to hardware and technology hang-ups, but that “Gajda’s more realistic view of the broader acceptance underscores the difficulties in changing long-drilled consumer habits and getting past the comfort level of paying with cash or swiping a credit card.”

Visa is planning to address the issue of consumer awareness at the 2012 Summer Olympic Games in London, England, which begin this week. Cheng reports:

“Visa is using the Olympics as an international showcase for mobile payments. The company has hooked up 140,000 payment terminals in London with near-field communication, or NFC, chips that enable the tap-and-pay process. The locations include 5,000 London taxis and 3,000 point-of-sale venues at the Olympics. The company is handing out several thousand Olympic-edition Galaxy S3s to VIPs such as athletes to test out the service.”

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