Mobile payments are an integral part of the much-talked-about frictionless customer experience. Retailers are looking for ways to streamline the checkout process, increase revenue, and drive incremental spend. Bluetooth Low Energy and near-field communication offer options in this department.
Process
BLE
Mobile payments in the BLE-enabled business model use beacons to allow consumers a near-frictionless experience. Like all other BLE interactions, it assumes the customer’s smartphone has the store’s BLE app and either the app is open or the smartphone has iBeacon.
When the customer walks into the store, the app will detect a signal from an entrance beacon and automatically initiate a check-in process to log the customer’s presence in the store. When the customer initiates the checkout process, he or she can opt to have the sales associate bill the purchase to his or her account, which was logged earlier. The sales associate will perform an identity verification routine and charge the transaction to the account.
NFC
Mobile payments in the NFC-enabled business model use EMV terminals to allow customers to pay with mobile wallets.
When a customer initiates the checkout process, he or she can opt to pay by mobile wallet. The customer selects a “soft card” from his or her mobile wallet and then waves the phone over or taps it against the terminal. This action brings the NFC elements in the phone and terminal close enough to initiate a connection and authorize the payment.
Pros and cons
BLE
BLE is convenient for consumers because it enables them to complete the payment process without ever doing anything except providing verbal confirmation of payment. Depending on the identity verification method, he or she may also need to provide ID or key in a code at the point-of-sale. This translates to a near-frictionless experience.
The downside is that the BLE payment model requires retailers to overhaul their payment systems. The point-of-sale system needs to be connected to the beacon network and to an online system that tracks customer accounts.
NFC
NFC is convenient for retailers because it does not require major changes to the existing payment infrastructure. EMV-compliant terminals use NFC for contactless payments, which means only a single piece of equipment needs to be replaced in order to support mobile payments. Payment brands are pushing merchants to become EMV-compliant anyway, so there is already some motivation for a shift in this department.
Additionally, BLE is safer because it engages only the Secure Element of a smartphone or NFC-enabled payment device and benefits from all of the security features of mobile wallet applications. The communication distance is also very short, which helps NFC transactions avoid signal interception.
The downside is that the NFC payment model still requires the customer to perform a payment action, so it isn’t as rapid or frictionless as BLE (except perhaps in the instance of wearable payment devices).