By using the phone's signals, the store could track that customer and could know exactly when that customer is approaching the exit and alert the greeter/loss-prevention associate to the approach. No need to verify the receipt, no need to stop the customer at all (unless the greeter sees something beyond the purchased items, but that's always been the case). There are clearly hurdles to this approach. But it's one of the few that addresses most of the current in-aisle mobile payment headaches.
As retailers slowly start to experiment with mobile in-aisle checkout (all except Apple stores, which have been doing it for years, the big showoffs), they are having to figure out a way to securely complete the process. One Florida retailer, an NCR beta site, learned about those limits when the store tried to deploy (pay particular attention to the NCR exec's description of alternative ways to check out securely).
A greeter could scan the image's barcode and compare it against store records to verify, but that's going to dramatically slow down store departures. In short, mobile payment's key attraction is making purchases faster and easier and avoiding lines. Seems silly to just move the bottleneck to the exits.
Even that wouldn't necessarily work, because a thief—standing by with the bogus digital receipt for the desired product—could just watch that aisle and wait for someone to legitimately purchase that product. Then the thief makes a beeline for the door and a quick scan seems to authenticate the purchase. ("We really did sell one of those SKUs on a mobile phone three minutes ago in aisle 12, just like the customer said.")
That's where the phone's signals come in. Because the phone is frequently sending out a unique (but anonymous) ID to let cell towers know where it is, that signal can be tracked inside a store—through in-store mobile purchases and right up until the customer is ready to leave the store.
The advantage of this wireless tracking approach is speed and convenience, which are the key attributes of mobile payment in-aisle. And that extra CRM data obtained while seeing what that customer does throughout the store is a nice touch.
The disadvantages are also plentiful. For starters, the laws surrounding the use of this information are still developing. As StorefrontBacktalk Legal Columnist—and former federal prosecutor—Mark Rasch argues in his column this week, many types of wireless tracking—even done anonymously and aggregated—may violate federal law in the U.S.
But those laws were written with a very different scenario in mind. If this tracking is limited to making sure that products are not stolen, it might indeed be considered permissible. Some malls in Australia and the UK have been experimenting with such tracking, and the company that is running those trials sees the issues as quite subject to debate.
Another concern speaks to consumers who shop with their mobile phone in airplane mode, effectively transmitting no signals at all.Another concern speaks to consumers who shop with their mobile phone in airplane mode, effectively transmitting no signals at all. They would turn airplane mode off to make a purchase and then turn it back on. Few consumers do that today, because it prevents them from receiving phone calls or texts. But privacy-worried (or, for that matter, cancer-fearing) consumers who do go airplane mode could undermine this system.
A different hiccup for this tracking lies in the nature of the signals. A mobile phone has a unique number called an IMSI (International Mobile Subscriber Identity). When first connecting with a cell tower, the phone sends this number to the tower, which confirms that the phone is allowed on the network (for billing purposes), and then returns a similar (but random) temporary number called a TMSI (Temporary Mobile Subscriber Number). The TMSI is then used between the phone and the cell tower after that, until they get disconnected.
This is the number we've been discussing, and it has one catch: The TMSI changes every time the phone moves to a new cell tower and also is regularly changed by the cell tower just to make sure the phone is harder to track. That means if you're tracking the TMSI within a store or mall, it may change. If your system is keeping a list, it may notice that a TMSI vanishes suddenly and a new TMSI appears to have taken its place. Maybe that just means the TMSI was changed by the network. Or maybe it means that one customer turned off her phone or left the store at the same time a different customer turned on her phone or entered the store. There's no way of telling. But until the TMSI changes, it will consistently point to the same customer.
There actually is a way to deal with this TMSI change, and the software can deal with it. Unless that specific aisle at that specific moment is very crowded—a scenario that could certainly happen during a holiday busy period—the changeover will typically happen very quickly. If the system, therefore, sees 1234567890 and then that number vanishes but a new number—9292929292—suddenly materializes in the exact same spot, the system can tentatively assume that it's the same person. In all probability, it is.
Even Wal-Mart is trying to figure out these issues. Venky Harinarayan, Walmart's senior vice president of global E-Commerce and head of Walmart Labs, was on a panel at the GigaOm Roadmap conference in San Francisco last week when he addressed the mobile issue. "What we've got to figure out is, how do you make that customer experience something really worthwhile," Harinarayan said, according to a PCWorld story. "These are not technology problems, they are customer experience problems."
The Wal-Mart exec is quite correct. The beauty of the wireless tracking is that it is entirely transparent to the customer, which is crucial to maintain that experience. And yet it also confirms that the phone that paid for that product is the same phone approaching the exit right now.
Additional reporting by Frank Hayes.