The New York Times “Bits” blog carried an item a few weeks ago about electronic coupons, sent to your mobile device at appropriate times:
How many times have you heard the prediction that one day, businesses like coffee shops will send us coupons on our mobile phones when we walk by?
That has long been the dream of mobile marketers. Still, only 9 percent of people have received a coupon or discount code on their phones based on where they were standing, according to new data from Compete, a Web analytics firm.
This could be the year that changes. People are increasingly interested in receiving coupons on their phones, especially at the grocery store, Compete found. On Wednesday, Target announced that it would start sending mobile coupons.
When I worked at IBM Research, several of my co-workers did a project involving a retail establishment and customers’ mobile devices. They dealt with electronic coupons, as well as other uses of the mobile technology, and they wrote a paper about the project. The abstract:
Toward a Mobile Digital Wallet
Mobile phones have now made their way into a large fraction of pockets and handbags worldwide. An intriguing question is whether such phones will eventually replace the physical wallets we carry. We believe the answer is in the affirmative, though plenty of challenges abound in overcoming entrenched personal and business practices and processes. In this paper, we explore the changes that need to ripple through the ecosystem to build a vibrant set of digital wallet services that potentially interact with each other to provide users both with increased convenience and a level of functionality hitherto unrealized. We describe our initial mobile wallet prototypes on web-enabled smart phones, designed to explore some of the challenges in creating the architecture and infrastructure necessary to make this vision a reality. Feedback from users and experts across a range of industries such as retail, banking, telecommunications, and healthcare indicate that we have just scratched the surface and a substantial wave of innovation is necessary to make the digital wallet a full-fledged reality.
Would consumers want to receive coupons and other offers on their phones, or would the interruptions just annoy them, seeming to be spam? My colleagues found that customers in the pilot program liked getting the coupons, and used them. In their paper, they note these results:
- The frequency of in-store visits was greater than the visit rate of the baseline loyalty program.
- The electronic coupon redemption rate was several times higher than traditional paper coupon redemption rates.
Indeed, going back to the Bits blog in the Times:
Thirty-six percent of consumers said they would like to receive mobile grocery coupons, 29 percent said they want cellphone apps that scan product barcodes for an offer or discount, and 26 percent want coupons from movie theaters.
Are electronic coupons the wave of the future? What about the general concept of an electronic wallet? If we could solve the privacy and security problems, would people like using their mobile devices at points of sale, in lieu of money or credit/debit cards?
I think I would.
6 comments:
You ask: "If we could solve the privacy and security problems, would people like using their mobile devices at points of sale, in lieu of money or credit/debit cards?" Like almost anyone, you say yes to this question.
Big surprise. If I could eliminate all possible negative consequences, including having to work for it, would you like to get an extra $1000 in the mail every month? My guess is you'd say yes, but in the real world you'd want to know what the catch is.
I think your question is equally counterfactual. The privacy and security problems will never be solved.
The real question is more like this: If we could convince you that security and privacy problems were relatively limited in their scope, would you want to use e-payment of type X. Again, the answer is usually yes (for many values of X), but this makes it clear what you have to do in order to succeed: convince most people that they don't need to worry about security or privacy.
This is precisely what Visa did when it waived all consumer liability for Internet transactions -- by convincing people that *they* would never suffer more than an inconvenience for using credit cards on the net, they instantly killed every startup payment system on the market, of which there were many at the time, *all* of them more secure than credit cards on the net. Over a decade later, credit cards are still almost the only payment system on the net. And they're still just about the *least* secure method for doing payment on the net.
First, for those of you who don’t know Nathaniel: he was a founder, in ’94, of First Virtual, the first completely online bank. So he knows what he’s talking about, here. He’s had to deal with security of electronic financial transactions directly.
Second, it’s not true that “almost anyone” would want this. I, personally, know many people who don’t, and I tend to hang with early adopters and tech-savvy folks.
I can’t imagine my mother ever wanting to use her mobile phone for payments and that sort of thing. But even among the techies I know, many will not use auto-payment for their monthly bills, such as mortgage and utilities. I know people who don’t like direct deposit for their paychecks. These are all things that are safe today, for any reasonable interpretation of “safe”.
Third, when I said “solve” the security problems, I didn’t mean “make them not exist”. Making them not matter (to the consumer) is also a solution, from the consumer’s point of view. So, yes, the Visa situation is also solving the problems, for the purpose of this discussion.
But I think your comment will prompt another, related post, maybe next week. I have more to say about this than belongs in a comment.
OK, I'll plead guilty to several counts of hyperole. "Almost anyone" was certainly among them. What I really meant was "Enough people to make it profitable/successful."
And if we redefine "solving the problem" to include "successfully convincing people it doesn't exist," then you're right, Visa solved the security problem. Too bad I wasn't cynical enough to understand this fifteen years ago. But under this definitions, many religious beliefs "solve" the problems of mortality and evolution. Similarly, Microsoft solves the reliability problem with television commercials.
Oh, one more thing: I use direct deposit, and I pay my bills online, but that doesn't mean I trust them to be safe, secure, or private. In my case, it means I'm more lazy than fearful where my finances are concerned.
It’s not just convincing people that it doesn't exist. Visa has actually made the problems (mostly) go away from the consumer’s point of view. They’ve done that by taking the problems on themselves — which really means, to a great extent, accepting the cost of fraud, and then passing it on to the rest of us in ways that we don't notice.
It’s not the same thing as just advertising it away with platitudes. That $1000 that the bad guys charged to my Visa card at the end of December really did not affect me in any way I can account for.
You're right, what Visa did had real content of value to the consumer, and one could argue that this might not be true of religions (or Microsoft).
But that $1000 did affect you, I'm pretty sure -- you probably had to get and perhaps rememorize a new credit card # and card, change it with several web sites, etc. They lowered the monetary cost to zero, and you tolerate the inconvenience cost.
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