FinTech Solutions Need Beacons for Mobile Payments
The number of fintech solutions is growing fast. So how do beacons fit into it?
Mobile payment transactions were predicted to grow by a massive 42% from 2015 to 2016. That’s up to 768.78 million USD from 549.91.
The study also suggests that “given the enormous advantages mobile money offers over traditional payment options, it won’t be long before mobile payments become as ubiquitous as credit cards.” Given how much people love their smartphones, it’s easy to imagine.
There are several ways fintech is changing the world and there are many people who stand to profit from it. This includes anything from edgy startups to users looking for faster and friendlier options. Even retailers and managers stand to benefit from more future-friendly solutions. More importantly, fintech’s rise will have numerous results, including digital banking and unusual blockchain uses. Many say it could mean death for traditional banking (though that’s just a tad overzealous). But there’s one field that almost everyone can agree on: mobile payments.
Why does everyone care about mobile payments?
Mobile payments have been growing in popularity around the globe. In many countries they can be more common than traditional cash. Even those who normally don’t mesh well with technology are using their phones to make payments easier. This is what makes beacon fintech solutions slightly more meaningful than many other kinds of cool, “disruptive” tech. Finances, managing how and what we spend, are topics very near and dear to the average consumer’s heart. It’s something they worry about each day and it’s also something that can cause a lot of stress. That’s why mobile payments are taking off. And beacons are one tool consumers are getting accustomed to.
One report from Prepaid International Forum found that 24% of adults in the UK have used mobile payment technology and 12% do so regularly.
Beacon fintech solutions: one tool several winners
While beacon-based applications have raised eyebrows in some situations, where, for example, shoppers fear they’ll be inundated with coupons and advertisements, mobile payment is a different topic entirely. Here, the customer wins simply by using the platform—getting in and out of a store with less hassle.
In short, being able to process payments digitally and from a distance means erasing huge lines–or at least making them much more manageable. It also means catering to those shoppers who are accustomed to speed and getting in and out with minimal interaction. Finally, it means big wins for the implementing company.
Employees will be able to spend less time tending the queue and more time in other parts of the store. This could mean a host of new possibilities when it comes to optimization and scheduling. Finally, increased flexibility and speed of payment would undoubtedly mean more data generation.
One win for small business: beacons mean no expensive POS tech
Beacon-based mobile payment may sound familiar. That’s because it’s very similar to what NFC tried to accomplish in recent years. However, while you can find many mobile-friendly ways to pay, NFC is not often one of them. This is due to the large costs of related contactless payment hardwares. This doesn’t matter much to large companies like Macy’s or Target, but for the smaller stores, this can be a pretty big burden. Just by shifting the burden to the customer’s mobile device, beacons open up a new world of opportunity for fintech solutions.
How are beacons already affecting fintech solutions?
Beacon-enabled fintech solutions can already be found around the globe. More importantly, they can be found solving numerous problems. There are two common ways to think about beacons in this scenario.
First, for example, you enter a cafe. The moment you cross that threshold, the payment app on your smartphone identifies the beacon signal. By the time you get to order your coffee and croissant, the cafe’s Point of Sale system already knows who you are and it’s able to process the payment immediately—with limited or no interaction necessary from you. Boom. You make it to work faster and don’t have to rummage through your wallet.
The second scenario is a bit more complicated. As you go through the store, the app also allows you to scan each item as you put it in your cart, drastically speeding up the process. For products not marked with security tags, this could mean almost instant purchases with only the need to verify your physical cart against a receipt as you exit.
Don’t wait. Just skip the line.
What combination of interactions are required depends entirely on the solution provider and shop managers. What this does mean, across the board, is greatly enhanced speed. It could mean skipping the line completely. When there’s a queue of a dozen grumpy shoppers waiting because the receipt printer is jammed, you could feasibly skip all that and go.
This is extra helpful in situations where the usual point of sales is actually quite far away. For example, a gas station or a very large warehouse store.
How secure are beacons?
Beacon hardware is incredibly simple and also inherently vulnerable. But that’s not to say that the beacons you use in mobile payments are completely unguarded. Every beacon is different, but the Kontakt.io team realized way back in 2015 just how vulnerable initial beacons were, and that’s why we added several security guards to our beacons including shuffling and end-to-end encryption. Hackability remains a problem for the software and system in general, though—a problem faced by all fintech solutions. But that’s between you and your solution god.
What’s next for fintech solutions
Beacons do have some issues they’ll have to face head-on in order to become foundational to mobile payments. Much like all fintech solutions, they’ll have to deal with security questions. This could mean answering the question of identifying a shopper when purchases are made at a long distance, away from staff, or the common fintech issue of integrating different kinds of cards into the system in an automated and practical way. Luckily, there are as many ways to address these problems as there are specific use cases, and it will largely be up to individual companies and solution providers to find what works for them.