Market forces are shifting in every industry around the world as competition intensifies and consumers look for better options. One industry that seems to be beginning to blossom in the North American market is the mobile payment industry and a California-based company, Bling Nation, is first to bloom. The company lets you pay for purchases with the wave of your cellphone, in what could be the start of mobile commerce in the Western World.
Using a cellphone to make purchases is nothing new in the global village. In fact, there is already a term for it, m-commerce (mobile commerce). People in Asian markets have been using their phones as Visa cards for years, yet the adoption into North American and European markets has lagged for numerous reasons. Cultural, technological and logistical differences are the main reasons that m-commerce has not yet made its way into mainstream Western culture, but that could all change in the near future.
Bling Nation, which was founded in 2007, has created what they call ‘tap and pay’ transactions. Their mobile payment process works like this:
- Users sign up at their local bank or credit union and receive a payment sticker for their mobile phone
- Users attach a sticker (a Bling Tag) to the back of their mobile phone and subscribe to the service through Bling Nation
- Users then go to their favorite local stores – merchants at these locations have a device called a “Blinger”
- When users are ready to make a purchase the merchant enters the total along with the buyer’s mobile phone number into the system. The buyer then taps or hovers their phone over the Blinger. Once the sensor on the Blinger reads the sticker, the transaction is processed and the buyer receives a text message confirming the transaction
- The transaction is not processed like a debit or credit transaction. The bank simply acknowledges that the transaction is processed and settles it with them at the end of the night
The value to the user is simply convenience and novelty. To the merchant, the value is lower transaction fees (about half of regular fees) and transaction tracking. The banks and credit unions are happy because these transactions bring in great business for them.
To pull the whole idea off, Bling has employed a very unique and compelling strategy. Instead of going after big banks and large chains, they have targeted local banks and merchants in what can best be described as a community-based approach. The great part of this strategy is that it encourages the growth of the local economy, as Bling users can receive discounts, loyalty rewards and other offers simply by subscribing to the service.
Another unique aspect of their strategy is to go for a low-tech solution rather than something really high-tech. They use a technology called Near Field Communication (NFC), a technology that uses an RFID chip embedded in the Bling Tag to validate transactions with the Blinger. NFC technology has a range of about 10 centimeters. The technology itself was unveiled by Sony in 2004 and its first commercial application was in a cellphone by Nokia in 2007.
Overall, Bling Nation has their work cut out for them, but they have a lot of support behind them. They had raised about as $33 million dollars as of October 2009, which will hopefully gives them enough time to penetrate communities around the US. No matter what happens though, it looks like mobile payments will no longer be something we can only dream of.
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