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March 24, 2016updated 04 Apr 2017 3:59pm

How to Establish Clear Leadership in the US Mobile Payments Business

Mobile payment apps must be able to handle all popular payment types to increase adoption and become a true mobile wallet. Since most consumers use both cash and non-cash payments, the ability to communicate barcodes into the scanner as well as communicating credit and debit card information into the payment terminal is key. George Garrick, CEO of Mobeam, writes

By EPI editorial

Mobile payment apps must be able to handle all popular payment types to increase adoption and become a true mobile wallet. Since most consumers use both cash and non-cash payments, the ability to communicate barcodes into the scanner as well as communicating credit and debit card information into the payment terminal is key. George Garrick, CEO of Mobeam, writes

In order to establish clear leadership in U.S. mobile payments market the app must enable "non-cash" payments and promotions, making fully digital Online-to-Offline promotions a reality. The importance of storing credit and debit cards is obvious, but today’s mobile payment apps are incomplete. First of all they are failing to acknowledge the importance of "promotions". Secondly, they are failing to address the widespread use of barcodes. Most promotions use barcodes, but barcodes simply cannot be read from smartphone screens by laser scanners. The laser scanner is the most widely used scanner type in grocery stores and most drug and mass merchandiser chains. So today’s leading payment apps only replace bank cards. Shoppers must still carry loyalty cards, gift cards, and paper coupons. The "mobile wallet" is really just a "mobile bank card replacement", and the checkout process using a mobile wallet is actually only a "hybrid" process that is still part manual using plastic and paper.

To become a true mobile "wallet", the app must be able to handle all popular payment types, cash and non-cash, which means it must be able to communicate barcodes into the scanner as well as communicating credit and debit card information into the payment terminal. The payment terminal and scanner are different entry points into the POS system. They cannot be used interchangeably. Promotions cannot be input into the payment terminal, even with NFC, and payments cannot be input into the scanner. The following describes in more detail how this environment relates to the effectiveness of mobile payment apps. Some of the information may be obvious and/or known to the reader but it is included for completeness, and for readers who may not be familiar with the US retail marketplace.


"Barcode". The barcode is a rectangular shaped series of black and white vertical lines which when read by a scanner are translated into a number. The number itself has little or no meaning. The POS system identifies the meaning of certain fields in this number, and other fields such as the product and manufacturer must be looked up from a database.

"Cash vs. non-cash payments". "Cash" payments are cash, or course, but also debit and credit cards which are cash alternatives. A "non-cash" payment is used to offset some or all of the payment due by the shopper. Examples are offers, coupons, gift cards, and loyalty programme discounts. Although these offset part of the payment due at checkout, they are not a general form of tender.

A "promotion" means the brand or retailer is selling the product at a temporary discount. There are two basic categories of promotions since some are issued by retailers, and others by manufacturers and brands. Some promotions are just advertised as discounts in the store for anyone to take advantage of, but others require the use of a paper coupon.

"Retailer" promotions, or "offers". This means the retailer is paying for the cost of the discount, and it can only be used at that retailer. It is a "closed loop" promotion. The term "offer" is commonly used. An offer is very different to a "manufacturer coupon". Some offers may be redeemed simply through an image of the offer, but many offers carry barcodes so must be scanned.

"Manufacturer Coupons". The brand manufacturer (like Procter, General Mills, Kellogg, etc.) pays for the cost of the coupon. It may be used in any store where that brand is sold. This is required by law. Sometimes the term "open loop" is used because they can be used anywhere the product is sold. The coupon must "work" at any retailer, therefore it must adhere to industry standards. All coupons have barcodes, specifically what is called a GS1 databar. GS1 is the industry organization which defines the standards. A "databar" is simply a long barcode which is usually printed on two lines.

Each year, approximately $500bn worth of coupons are distributed. Of these, about $5bn are redeemed at checkout to partially pay for items purchased. Coupons are very strategically important to brands and manufacturers. Most shoppers use coupons at checkout to partially pay for their purchases. Coupons are extremely important in US retailing. All major brands issue coupons and all major US retailers including Walmart accept coupons, and Walmart redeems more coupons than any other retailer.

ALL coupons today MUST BE printed on paper and handed to the cashier to be redeemed. Even coupons downloaded from a website must be printed out and handed to the cashier in the form of paper. Therefore there are no "fully digital" coupons in the marketplace yet. At some point they must be handled in paper form, including "clearing" of coupons which means they are sent to a warehouse in the US or Mexico to be verified through manual counting and processing.

There is an industry-wide initiative in the US to officially create the Mobile Manufacturer Coupon, or MMC. This will be a fully digital coupon. Mobeam is working with key issuers of coupons, retailers, and other industry parties including GS1, to establish the MMC standard which will be available for any issuer, distributor or redeemer of coupons. Once this standard is issued, digital coupons will be usable in any retailer with a scanner.

Mobeam expects this to be completed in Q1 of 2016. This will also fully enable "Online to Offline" promotions since all online offers will be redeemable at retailers without the need to print them onto paper. The launch of the MMC with a GS1 standard will be disruptive to the US couponing industry since it will enable fully digital coupon issuance, redemption and clearing for the first time. The MMC has numerous benefits to consumers, retailers, and CPG brands including more convenience, better targeting, reduced fraud, and greater retail efficiency.

"Gift cards". A gift card is a plastic card like a bank debit card except that it has a stored value associated directly with the gift card rather than the shopper’s bank account or credit. Gift cards are associated with a specific retailer so they are usable for anything the holder buys at that retailer. When the shopper checks out, they can use a gift card like a debit card. If they do not use the entire value of the gift card, the amount they use is deducted and the remaining amount remains associated with the card.

People accumulate a large number of gift cards, but often do not use them all because they do not shop at that retailer, or forget to bring their card. Nobody carries around all of their gift cards every day. And even if they did, it would be a bulky pack of plastic cards. As a result, many gift cards never get redeemed and this is both a loss of value for the card holder and a cost to the issuer.

Either magnetic stripes or barcodes are used to redeem giftcards, depending on the retailer. Although most gift cards are redeemed through their magnetic stripe, many large US retailers like Whole Foods, Macys, and Bloomingdales scan the barcodes.

"e-Gift cards". This is the fastest growing segment of the gift card industry today, more than doubling each year. An e-gift card can be purchased online and delivered through email. All e-gift cards have barcodes. The email must be printed out and handed to the cashier to be scanned. Or, the cashier must manually enter a long number. Several third-party gift card exchanges like enable trading, selling and purchasing of gift cards which are then delivered digitally with a barcode.

"Store Loyalty programmes". Most large US retailers operate loyalty programmes where frequent shoppers at that store or chain may sign up and receive an ID, usually in the form of a physical plastic card similar to a bank card, and which has a barcode for scanning. The loyalty card has no direct monetary value, but identifies the shopper as a member of the store’s programme. The store’s POS system keeps track of everything that shopper purchases at that store or chain, and the chain is able to offer discounts to shoppers based on their past purchasing behaviour. The store or chain can deliver a promotion to a particular shopper from anywhere, such as online or through a mobile app, as long as they can identify the shopper’s account (which can be done by name, phone number, or the shopper’s loyalty programme ID number). The next time that person shops at that store or chain and scans their loyalty card, the POS system recognizes them and knows that they have the promotion in their account, and the value is deducted instantly from the checkout amount.

Most shoppers belong to multiple loyalty programmes, so each time they shop they need to identify themselves to receive credit for what they purchase as well as any promotions which may be in their account. But similar to gift cards, it is inconvenient to carry around all of your loyalty cards so many people do not receive full benefits.

A mobile payment app needs to be able to store an unlimited number of loyalty membership cards, so the appropriate card can be retrieved based on the user’s location and communicated to the scanner at checkout. Today there are more than 400 loyalty programmes at retailers across the US.


The preceding clearly describes why "non-cash" payment methods such as promotions are strategically and tactically important to brands, retailers and most US shoppers. It also describes that many if not most of these "non-cash" payments are made through barcoded plastic cards or paper coupons. For a mobile payment app to truly function as a "mobile wallet" it must be able to handle most or all common payment methods. No mobile payment app currently in the market can transmit a barcode into a laser scanner, which means they are extremely limited or completely useless when it comes to coupons, e-gift cards, many plastic gift cards, most retail loyalty programmes, many or most retail offers, and other barcoded payment methods and apps such as gift card exchanges. And when MMC is launched, they will be unable to transmit digital coupons.

The only way for a smartphone to communicate to a laser scanner is with technology that pulses the proximity sensor LED to emulate the reflection of a barcode. This is interpreted by the scanner as a reading of the barcode. Thus, "beaming" enables a mobile payment app to effectively use ALL of the barcoded promotion and non-cash payment types discussed above.

The beaming capability is currently installed on over 330 million Samsung phones, and additional brands of handsets are expected to enable beaming in the next few months. In many ways "beaming" is like Bluetooth, NFC, or wifi. It is a new method of contactless communication between a smartphone and a receiver, in this case a laser scanner. As the promotion and payment types described above continue to become increasingly popular, phones without beaming will be at a disadvantage vs. phones with beaming. And emerging apps using barcoded payment methods will only fully operate on phones with beaming.

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