Starbucks Mobile Payment System Didn't Use NFC for a Reason

Technology decisions ought to be dictated by business requirements, and so should the timing of technology investments. Generally speaking, if a business can wait for the "next generation" of technology, it often should do so. If it cannot wait, and has an immediate business need, it should buy the existing solutions, especially if there is an upgrade path.

The Starbucks mobile-payment app, now available for iPhones, the iPod Touch and several BlackBerry models, is based on the coffee chain’s popular prepaid Starbucks Card, and is an example of that sort of process. You might wonder why Starbucks would deploy a 2D bar code solution now, when it could wait 18 months to two years and possibly use a new system based on one or more near field communications platforms.

The answer is that Starbucks did not think it could afford to wait. Nor, in one respect, is the Starbucks mobile payment system primarily about "payment." It is about loyalty, especially the Starbucks card.

Customers use the private-label card for one in five transactions at Starbucks coffee shops and last year loaded $1.5 billion in their card accounts, up more than 20 percent from 2009, said the company. Since the mobile payment app is linked to the Starbucks card, and since the Starbucks card itself if more about loyalty than "payment" as such, Starbucks is betting that the chance to extend its loyalty program to the mobile handset is worth doing right away.

Not unimportant is the fact that 2D bar codes can be used by a wide range of handsets, while near field communications is only now starting to be introduced. In a scale business, the advantage of large installed base is obvious. So is the fact that the terminal upgrades at roughly 8,000 locations are modest.

With the app, after the customer scans the 2-D bar code at the point of sale, Starbucks deducts the amount of the purchase from his Starbucks Card account over the network.

The physical implementation might not be the most elegant imaginable (one has to have a physical Starbucks card first, and you have to obtain one physically, at a store), but that was not apparently the most-important consideration. Speed to market, low cost and ubiquity seem to have been the overriding considerations.

Starbucks’ Bar-Code Embrace Unlikely to Slow NFC

Mobile Shoppers: Some Prefer Apps, Some Mobile Web

Even though half of all mobile phone owners are mobile shoppers, they are not all equal. A very small group are actually driving the majority of mobile shopping. In fact, that group – dubbed “heavy mobile users”-- generate ten times more shopping than “light users.” See Retail's BIG Blog | Three tips for marketing to the mobile shopper

Heavy shoppers tend to do things like check store hours and addresses, use shopping apps weekly, and experiment with new mobile marketing technology in greater numbers and more frequently than other shoppers. They also skew younger, male and toward using the iPhone.

Light shoppers, by contrast, skew female and are more likely to use other devices such as Android and BlackBerry phones, according to an Arc Worldwide survey.

UK Telco O2 Will Become a "Bank"

Telefonica O2 UK plans to launch a number of mobile-wallet services in the second half of 2011, among the most significant a move to become a "bank" of sorts, or perhaps the equivalent of a credit card or debit card issuer.

Among the wallet services O2 plans to offer will be contact-less payment that could include one or more payment applications the telco issues itself. But O2, one of the United Kingdom’s largest mobile operators with more than 20 million subscribers, plans a number of other services, including mobile browsing and product search, mobile-money transfers between subscribers and bill payments.

UK Telco O2 Prepares For Bigger Push into Payments Business | NFC Times – Near Field Communication and all contactless technology

AT&T Points to "Talk and Surf" Features of its iPhones

Citi relies on multiple mobile channels for customer engagement

Citigroup Inc.’s Citibank is placing mobile at the center of its customer engagement strategy, with cost-cutting and revenue-generation significant fringe benefits, says Mobile Commerce Daily.

The financial services giant has applications for Google’s Android and Apple’s iPhone and iPod touch, a mobile Web site that is optimized for smartphones and Citi text banking, which lets customers check their account balances, view recent activity and see credit card statements via SMS. In addition, Citi is integrating social media into its mobile platforms.

Citi relies on multiple mobile channels for customer engagement

Mobile banking apps pose security concerns

Despite the rapidly increasing levels of smartphone use among American consumers, and the consequent opportunity to consolidate consumer loyalty in banking and other industries, mobile software used to access bank websites often does not yet meet most security standards, according to a report from American Banker.

The magazine said testing performed by Chicago-based computer security firm viaForensics had found critical security loopholes - enabling researchers to access transaction data, usernames, and passwords - in well over three quarters of the mobile banking applications tested, running on both Android-based smartphones and Apple's iPhone.

Trust is crucial for banking and virtually all other economic transactions, so such concerns will have to be addressed before wider adoption is possible, especially since the banking infrastructure in the United States is highly developed, unlike the situation in other parts of the world, especially sub-Saharan Africa, for example.

Right now, mobile banking is a "nice to have" sort of feature, while in Africa mobile often can function as the banking system itself.

Report: Mobile phone applications for banking websites still pose security concerns

Net Neutrality is a Regulatory ‘Trojan Horse'

"The Federal Communications Commission’s net-neutrality decision opens the FCC to “boundless authority to regulate the internet for whatever it sees fit,” the Electronic Frontier Foundation says.

The EFF favors net neutrality but worries whether the means justify the ends.

“We’re wholly in favor of net neutrality in practice, but a finding of ancillary jurisdiction here would give the FCC pretty much boundless authority to regulate the internet for whatever it sees fit," EFF says.

FCC Net Neutrality is a Regulatory ‘Trojan Horse,’ EFF Says Wired.com: