Selling stuff through mobile devices
Setting up mobile billing and commerce
Billing through mobile carriers and PSMS
Taking advantage of mobile wallets
Mobile commerce, also known as m-commerce, means selling things through a mobile device. It usually involves a monetary transaction as opposed to simply messaging someone who buys something at a later time. You have two basic ways to make money through mobile commerce. First, you can sell content and services that can be consumed on mobile devices, such as ringtones, applications, games, content subscriptions (everything from joke and horoscope of the day to newspaper content), non-profit donations, and more.
The second way to make money through mobile commerce is to sell physical goods and services, like t-shirts, taxi rides, parking meters, hamburgers, computers, tractors, and more, and bill for these items through non-carrier billing channels; for example, credit card, PayPal, or similar billing services.
Charging customers through mobile devices is governed by a select handful of global carriers and paymasters with whom you need a close relationship if you want to collect money from your customers' mobile phones. In fact, every aspect of mobile commerce has its own set of gatekeepers and processes.
This chapter shows you what you need to know about the basics of mobile commerce, how to set things up, and how to bill your customers when you sell content, services, and physical goods through mobile phones.
You have three basic choices for selling through mobile, but not all of them support the sale of every type of product or service. The following list shows you which outlets are available for different types of products and services so you can decide where to sell your stuff:
Third-party outlets: Many independent aggregators of mobile content and products can be found online — just go to your favorite search engine and search for ringtones. You can find hundreds of Web sites devoted to selling that type of mobile content. These sites work by either paying a commission to the sellers or by buying products and content outright and reselling them. The benefit of third-party outlets is that they might have higher numbers of visitors than you could attract on your own. These outlets usually charge a commission of 30% or more for the service of selling your stuff. If the commission is less than what you would spend to drive your own traffic to your own store, a third-party outlet could be for you. Of course, you want to look for those sites with the most traffic representing your ideal customers; in other words, keep in mind that customers gravitate to services that align with their profiles. Use a service that matches up with your ideal customer.
Carrier stores: Mobile carriers have their own "stores" for selling mobile content (these are often referred to as the carrier's on-deck presence). The difference between payment from third-party sites and carrier sites is the fact that carrier sites enable the consumer to purchase content through a credit on their monthly phone bill. That adds a measure of convenience for your buyer, but it also means you have to share most of the revenue with the carrier (see the section titled, Collecting Payment through Carrier Billing: PSMS and the Mobile Web" later in this chapter.) You should approach all major carriers with your content to increase your chances of pickup; however, this can be a long and involved process. Carriers either buy the rights to mobile content or pay a commission on sales. Neither of these options generates a margin quite as large as selling mobile content yourself. For example, when selling content via Premium SMS (PSMS), carriers often take as much as 60% of the revenue.
Your own mobile store: This can involve either setting up a mobile Web site or offering content for download onto a mobile device through text messaging. On the plus side, you keep all the proceeds from the sale of your mobile content when you sell it yourself. The downside is that you have to get the word out. If you have an existing online presence with established traffic, this could work as a sales platform for your mobile content.
In order to sell something and facilitate a transaction through a mobile device, you must first have a mobile property, such as
A text messaging program (see Chapters 4 and 5)
An MMS program (see Chapter 6)
A voice service (see Chapter 11)
A mobile Internet site (see Chapter 8)
A mobile application (see Chapter 9)
A tie-in with contactless payment services via Near Field Communications (see Chapter 1)
Something to sell, such as mobile content or a physical product
Whatever mobile property you're using to facilitate the transaction must be capable of setting the billing process in motion upon user initiation. This means plugging a billing initiation process into the flow of whatever mobile property your customers are interacting with.
The following sections tell you what you need to know and who you need to partner with to get started with mobile commerce and billing.
The first step toward enabling mobile payment is to set up a merchant account. Merchant accounts are available from banks, credit card companies, and third-party services such as PayPal (www.paypal.com).
A merchant account connects your customers' mobile payments to your business and enables the companies behind the scenes of every transaction to identify which transactions belong in your bank account funds.
A typical merchant account usually requires your business to be legitimate and established, so you should expect an application process that asks you for detailed information about your company's financial condition, ownership, and history.
Tip
Many, many companies out there would like to provide you with merchant services, and they all negotiate their rates. If you're a small business, we recommend starting with PayPal or your small business bank. If you have a more sizeable business, go with an enterprise solution.
An m-commerce system has two components, each of which must be established to enable your customers to pay and your business to receive the funds:
Commercial relationships with everyone in the transaction process, including
Mobile commerce application providers that provide the software and user interface to enable payment collection
Paymasters who control the payment authorization and fund transfer gateways
Fulfillment houses, if you plan to sell physical goods
Content providers, if you plan to sell downloads
Check-out functionality in your mobile property. For example, your mobile Web site might have a Buy It Now button that is linked to a mobile order form, as shown in Figure 13-1, so your customers can input their order information.
When you're using a third-party payment option, building these relationships can be as simple as linking your customers to a third-party interface or incorporating some code into your mobile properties that points customers to the payment system. Third-party billing systems typically have all the necessary behind-the-scenes relationships in place for you, adding a level of convenience. Those services aren't free, however, so if you're planning on doing a lot of business on mobile, you're going to save a lot of money if you set up your own accounts and payment gateways.
Here are the four main partners you need to enable mobile commerce on your own:
Carriers: Nearly every aspect of mobile commerce on a mobile device is managed by the major carriers; that is, unless consumers are buying content through third-party mobile application stores. Billing for any type of mobile content is generally subject to carrier review. Some payments can actually be billed and collected by the carriers on your behalf after a customer confirms payment by replying to a PSMS message or by confirming payment on a mobile Web site. (We discuss carrier billing through PSMS and mobile Web later in this chapter in the section Collecting Payment through Carrier Billing: PSMS and the Mobile Web.)
m-commerce application providers: M-commerce application providers are companies that specialize in managing the technical details of financial transactions via the mobile device. They work with and through mobile carriers, credit card companies, and related billing services companies to help you sell your goods and services via the mobile device. You have many choices of companies to work with. Here are just a few that can help develop an end-to-end mobile commerce solution. Leading m-commerce paymasters and application providers include PayPal (
www.paypal.com), Mocapay (www.mocapay.com), Obopay (www.obopay.com), Usablenet (www.usablenet.com), Digby (www.digby.com), DeCare Systems Ireland (www.decaresystems.ie/), Spotlight Mobile (www.spotlightmobile.com/), Bango (www.bango.com), ShopText (www.shoptext.com/), mFoundry (www.mfoundry.com/), Billing Revolution (www.billingrevolution.com), Branding Brand Communications (www.brandingbrand.com, see Figure 13-2) and Square (https://squareup.com/).Content providers: If you're going to charge people for content such as ringtones, apps, games, or periodic messages, you need content providers to create this content for you. If you are selling products or services through the mobile Internet, content providers are usually the companies who develop the content in your Web site and maintain it. If your company develops and maintains your own content, you are the content provider. You can also work with companies that aggregate mobile content from other developers so you can sell it to your customers.
Aggregators: Aggregators (discussed in Chapter 2) provide connectivity between an application or content provider and the carriers' wireless networks. Without them, you wouldn't be able to deliver any content to a person who buys from you through their mobile phone. Aggregators typically have agreements with most or all of the major carriers, so you won't have to develop a separate billing system for each carrier. Most of the time, you won't be working directly with an aggregator; more than likely, you'll work with your application provider.
If you launch an e-commerce site, such as a traditional computer-accessed Web site that takes credit cards, you can assume that people who visit your site have a full keyboard, a mouse, and a color display with which to view, select, and purchase your products. With m-commerce, you can't assume that every consumer you want to reach has that same functionality on their mobile device.
Even the most advanced mobile phones differ in the types of hardware and software they support. Here are the key differences and what you can do about them to make sure it's easy for your customers to pay on mobile phones:
Keyboards: Some mobile devices have full keyboards; some don't. To reach the widest audience — which is the goal of a mobile commerce program — you need to develop content and user interfaces that are not overly dependent on extensive typing. Some retailers, for instance, include payment forms that require a user to enter his name, address, phone, e-mail address, credit card information, a user name, and a password. You want to collect only the information you absolutely need to complete the transaction; otherwise, you run the risk of the customer not completing the transaction because he finds the process too tedious.
Navigation: Some mobile devices offer mouse-like cursors, whereas some others rely on scroll-through lists. There are two ways to deal with this aspect of user interface: create separate versions of your mobile site, one optimized for smartphones, like the iPhone, and a streamlined version for less capable mobile devices; or create a single mobile site that is both inviting on the screen (for smartphones) and simple to navigate (for other phones).
The Steve Madden mobile commerce site is a good example of a streamlined interface featuring description, purchase and similar product links, optimized images, and social media integration (see Figure 13-3).
Uniformity in data plans: No one pays for broadband Internet access at his home or office by the minute or the kilobyte anymore, yet some people pay for mobile Internet access that way. Keep the number of screens that customers must use to make a payment to a minimum. Also, make sure your payment screens load quickly and don't have too many images. Unlimited data plans are becoming more popular, but you still don't want your customers waiting while an overabundance of payment screens download.
Display size: Putting tablet computers and iPads aside for a moment, mobile devices always have a smaller display than their computer cousins, no matter how powerful they are. One thing an m-commerce site developer can always count on is having to tailor the size of the site's visible area to accommodate the display limitations of a mobile device. Use a mobile site development program (or establish parameters for your mobile site developer) that keeps payment pages properly sized so that no aspect of the selection or payment process is overlooked by the user.
Security: The mobile channel is not inherently less secure than the online channel, but consumers tend to be more wary about their personal information when conducting transactions in the mobile space than they do online. Partly, this is because of the relative youth of the mobile channel compared to online. But both the portability of the mobile device and the personal nature of mobile communications make consumers naturally more mindful of security vulnerability. The trick is to keep things streamlined and easy-to-use without compromising security and privacy protocols. Amazon (
www.amazon.com) does a good job of enabling users to perform single-click payments after an initial setup — this is a good example of safe yet streamlined consumer interaction.
A carrier portal is a mobile Web site owned by a carrier that offers products and content downloads to the customers of that specific carrier (see Figure 13-4).
Every mobile carrier offers its own branded portal on the mobile phone. This portal features content and services created by the carrier and its partners. You too can offer content through a carrier portal, but the process isn't as easy as you may think. To offer your content and services for sale through a carrier's portal and ensure that you ultimately get paid, you must follow one or more of the paths described in the following sections.
Many companies establish a direct relationship with each individual carrier for the purposes of promoting their content and services directly on the carrier's portal. The deals that you can strike can vary greatly, but here are some common ways to develop revenue opportunities with a carrier:
Note
Direct carrier relationships take time to develop and negotiate — often, 12 to 18 months or more. This time frame assumes that you already have a head start and generally know who to talk to.
Many carriers offer developer and content-channel relationship portals that you can sign up for on the Internet. The channel relationship business model differs from the direct carrier relationship discussed in the preceding section in that you're not negotiating a direct deal. Instead, with a channel relationship, you get access to the carrier portal, business terms that are easy to adopt and employ, royalty payments for the sale of your content, access to the carrier's marketing education materials, and more. Table 13-1 lists various carrier content and developer programs.
Table 13-1. Carrier Developer Programs
Name of Carrier | Contact Information |
|---|---|
Sprint |
|
Verizon |
|
T-Mobile |
|
AT & T Wireless |
|
Here's how to get started with channel relationships:
Go to the carrier's Web site and sign up for a standard third-party service program.
Have your content or service certified.
Note
You must be certified before the carrier puts your content on its portal. Every carrier's certification process is different, based on the type of content or service you're offering. Review the details of the process on the carrier's Web site.
Accept the terms and conditions of the program.
The terms include how much and when you get paid for your services. In very rare situations, you may be able to obtain minor adjustments in the standard program terms.
Some intermediary companies have direct relationships with mobile carriers that have been forged over many years. The intermediary firms sublicense your content to get it on a mobile carrier's portal.
Tip
Intermediaries are great channels because they enjoy economies of scale and greater reach than you could get on your own by going to each carrier individually.
Examples of intermediaries include Airborne Mobile (www.airbornemobile.com), Thumbplay (www.thumbplay.com), Zed (formerly 9 Squared; www.9squared.com), and Mobile Streams (www.mobilestreams.com). Each company has its own business model, but you make money from every sale of your content and service, minus any revenue splits, transaction fees, setup fees, and maintenance fees charged by the intermediary.
Sometimes it's more convenient for your customers and for your business if you allow the mobile carriers to collect payments from your customers on your behalf. With carrier billing, the mobile carrier collects payments from your customers by placing the charges on their mobile phone bills, as shown in Figure 13-5.
When your customers pay their mobile phone bills, the mobile carriers send the payments to your business minus a fee for the service.
Carrier billing is primarily used to sell content, rather than physical products. These days, you can use carrier billing to collect payment from customers who want to
Receive text alert content such as jokes and horoscopes
Participate in voting and contests
Download games, ringtones, and images
Receive MMS messages
Donate to a charity though mobile giving
Tip
Carrier billing eliminates the need to collect credit card numbers, send out paper bills, and many of the other hassles that go along with accepting payments directly. Of course, just when you think something sounds simple or too good to be true, there's a catch. Wireless carriers recognized this opportunity early on and established very clear guidelines, processes, and fees for marketers who want to bill customers through their carriers. The following sections show you how to set up carrier billing through premium SMS campaigns and mobile Web sites.
One of the most pervasive methods of carrier billing is payment via premium SMS. Premium SMS (PSMS) refers to the practice of charging a consumer for content, like ringtones, games, applications, and alerts via MMS or SMS messaging. Even though premium SMS includes MMS messages, people in the industry often refer to it as PSMS, so that's what we do in this book.
Before you think about how you're going to bill your customers through PSMS, you have to remember that your customers are the mobile carriers' customers first. Because mobile carriers want to protect their customers and keep them from being unhappy, you have to go through many steps to set up PSMS. Here are the steps involved:
Identify the content you want to sell.
Music (including ringtones and full tracks), videos (especially behind-the-scenes and hard-to-find content), graphics and wallpapers to personalize your device, and cellphone games are great things to sell via Premium SMS. Although you can bill people for physical goods, PSMS pricing can make that very expensive because a portion of the sale price goes to the wireless carrier. (Skip ahead to the section called, "Understanding Premium Messaging Payout" for more information on billing details.)
Choose a price point for your products.
Your customers are the best judge of what your premium content is worth, so it's often helpful to do a quick focus group and ask people what they would pay for your products. Think of this as getting help from the audience on the game show Who Wants to be a Millionaire? — usually, the crowd is right!
Get a short code or use a shared one provided by your application provider.
You can read more about obtaining and renting short codes in Chapter 4. This short code is the billing mechanism that enables you to start making money from your content.
Because it's not easy to do PSMS entirely on your own, we recommend that you choose an application provider to help you through this process.
Most importantly, your service provider is going to help you write an application (called a campaign brief) that the carriers must approve before you can start making money through PSMS (see Figure 13-6). With PSMS, the carriers are very careful about who can charge their subscribers for content. Each carrier has different rules and regulations — this is why a partner can help to simplify this process for you.
Tip
Lean on your aggregator to help you fill out the brief. You can to refer to the Industry Standard Best Practices on the MMA Web site at
www.mmaglobal.org. The leading wireless aggregators include OpenMarket (www.openmarket.com), mBlox (www.mblox.com), Sybase (www.sybase365.com), and Ericsson IPX (www.ericsson.com/ourportfolio/ipx).Prepare a demonstration Web site for your short code application.
This Web site should show exactly the type of content that you will be selling and how a customer might buy the content and get it on his phone. It also must comply with the carrier's guidelines. This is basically a demo of your new business! This is purely to get through the approval process with your campaign brief. The wireless carriers, aggregators, and audit houses need to see a working demo of your service before they approve it to go live.
Tip
You should definitely make sure to have your Web site demonstration ready on the heels of submitting your campaign approval form (see Chapter 3) to the carriers. You don't want to move to the back of the line for approval, if you're not ready when your time at the front of the line has come! Getting a campaign brief approved can take up to six months.
After your program brief has been submitted, start thinking about marketing your service.
Whether you're an Internet novice or veteran, there are some great ways to use affiliates to drive traffic to your Web site. Check out Commission Junction (
www.cj.com), LinkShare (www.linkshare.com), or Amazon Associates (affiliate-program.amazon.com) for a few of the most popular ones. You should also think about using Google AdWords, doing strategic partnerships with other mobile companies and getting your PSMS short code everywhere (from your e-mail signature to your print, television, and radio advertisements), so that any potential new customer hears about your service!
Note
Remember that all PSMS messages require double opt-in by the recipient of your message. To read more about opt-in regulations and attracting people to your messaging campaigns, read Chapters 3 and 4.
If you decide to bill your customers $5.00 for a PSMS message, you aren't going to receive the full $5.00 because the carriers charge you a fee for billing the customer and collecting the money for you.
A PSMS payout refers to the amount of money you receive from the mobile carriers upon selling your content via PSMS. In return for processing the transaction, billing the customer, and using the carrier infrastructure to manage the PSMS transaction, wireless carriers typically take between 30 percent and 60 percent of the price charged to each consumer's phone bill.
The payout schedule is based on total sales by price point and the payouts can be different for every carrier. For example, if you sell a PSMS piece of content for $1.99, the carriers take roughly $0.60–$1.00 of the $1.99, and your payout is the amount that is left over ($1.00–$1.40).
Note
Although this revenue share is higher than other payment processing platforms (PayPal, Visa, or MasterCard, for example) and it may sound high to you based on your experience outside of the mobile industry, PSMS and the wireless carriers eliminate a lot of pain and challenges encountered during this process in return for their revenue share. They take care of the customer service, billing operations, and billing verification issues, while empowering companies like yours to get into PSMS quickly and inexpensively!
Tip
The revenue share typically increases on more expensive consumer price plans. For example, a $9.99 plan will likely generate $7 in gross payout from the carriers (70% payout), compared to a $.99 plan that will net a payout of $.45 (45% payout ratio).
Logging each transaction that your campaign sends is very important for the final step in collecting revenue from your PSMS campaign. This process is known as reconciliation.
At the end of each month, you and your aggregator discuss the exact total of PSMS transactions generated over the prior month to ensure that you, the carriers, and the wireless aggregators agree on the revenue that has been collected. Discrepancies do happen, so make sure to have your logging system in place and come prepared to demonstrate your case, in the case that there is a discrepancy between the various transactions records.
Tip
When your report comes from the carrier or the aggregator, check the numbers against your sales records and calculate your expected payout to ensure you aren't surprised by unforeseen charges or fees.
Giving goes mobile
In 2007, an industry-leading entrepreneur, Jim Manis, and his team at the Mobile Giving Foundation (www.mobilegiving.org) worked closely with the mobile carriers in the United States to establish the practice of mobile giving. With mobile giving, consumers are able to make micro-donations via premium SMS. The donations are usually in $5 and $10 increments. However, unlike typical PSMS payouts, which are reduced by carrier fees, 100% of the donated proceeds are given to the charity by the carriers and the Mobile Giving Foundation. The charity pays only some nominal transaction and application services provider fees to set up and maintain their mobile giving programs (fees vary by provider).
Mobile giving came into its own in response to the January 2010 Haiti earthquake. Leading charities, including UNICEF and the Red Cross, raised more than $40 million in a little more than a week through mobile giving. For example, the Red Cross, via all its traditional and new media channels (for example, television, e-mail, social media, and related channels), invited people to donate by texting Haiti to a short code to donate $10 to Haiti relief, as shown in the following figure. (See www.mobilegiving.org for terms and conditions for this and related programs.)
To participate in mobile giving programs, you must be a 501(c)3 and meet the Mobile Giving Foundation qualifications. See the Mobile Giving Foundation Guidelines for details (http://mobilegiving.org/Files/MGFGuidelines.pdf).
Note
Keep in mind that your reconciliation report is not sent with a payment from the carrier. The wireless carriers and aggregators typically pay between 90 to 120 days after the billing event happened, which means that businesses should not expect to be paid any earlier from their PSMS businesses. This is vitally important to ensure that you don't get in a cash flow crunch while operating your business. Despite some of these long payment windows, several companies have built very significant PSMS businesses in the U.S. and around the world. We hope yours is the next success story!
Carrier billing through the mobile Web is much simpler than PSMS because you won't have to go through the process of obtaining short codes and obtaining opt-in permission through SMS. If you're selling mobile content via the mobile Internet browser, some paymaster application providers, like Bango (www.bango.com), already have relationships with mobile carriers so you can sell content by using a confirmation link on a mobile Web page instead of a PSMS message (see Figure 13-7).
This billing method is much more convenient for consumers and typically generates much higher participation rates (meaning you'll sell more stuff) than other billing methods such as PSMS and credit cards.
Tip
Check with your mobile billing application provider to see if it supports carrier billing via mobile Web browser in the country you're looking to sell content. Not every carrier in every country supports this capability.
Actually, selling items through the mobile Web isn't very much different from selling things through the regular Web. (Well, it's better, obviously, but not too different.) The first step is setting up a billing system. To do this, you must
Determine your billing needs.
Are you willing to work with an established billing service, like PayPal, that may take a percentage of each sale, or do you want to set up a proprietary billing system? Using a third party like PayPal leads to fewer headaches, but also slightly lower margins. If you're striking out on your own, you need to create software to accept credit card numbers and interface with paymasters (like Visa). That software also has to be integrated, at least on the back end, with any other sales channels (for example, online or in-store) for tracking and repeat customer purchases.
Implement a billing service.
Third-party billing services like PayPal plug right into your existing mobile site, but if you're starting from the ground up, you have to create a program that works with your mobile site. Proprietary systems and Web services that allow you to create a billing system that can be incorporated into your mobile site are available. The best bet to avoid PayPal (if that's your goal) is to seek assistance from a mobile payment specialist, like Billing Revolution (
www.billingrevolution.com), who can work with you through every phase of the billing implementation process.
Here's a vision of utopia for your business: a world where everyone carries a single device, capable of direct communication, Web access, payment, identification, and entertainment, and everything and everyone they interact with can read that device. No more bulky wallets stuffed with credit cards, no more of that foldable green paper with dead white presidents on it. No more being turned away at the sales counter for not having the right credit card and no more guessing at account balances. Every payment is secure, and every transaction is basically at your fingertips.
Mobile commerce is a growing field that enables consumers to use their mobile devices for payment in a physical retail environment, thus turning the mobile device into a mobile wallet. Yes, people carry traditional wallets around too, so they are just as mobile, but not nearly as convenient as having all your purchasing power available in your phone. Some of the leading mobile wallet players in the market include Western Union (www.westernunion.com), Gold Mobile with its GoMo Wallet offering (www.gomowallet.com/), mFoundry (www.mfoundry.com), and Alcatel-Lucent Mobile Wallet Service (www.alcatel-lucent.com), to name just a few.
In the relatively near future, more and more payments will be made through the mobile wallet. Anyone wishing to engage in mobile commerce (this means you) needs to begin searching for ways to make the mobile wallet welcome wherever you sell goods or services.
The following sections show you the features of mobile wallets so you can adjust your marketing campaigns and terms of payment to allow your customers to take advantage of the convenience of paying for your products and services through their mobile wallets.
At its core, mobile integrated payment is simply the payment for goods or services using the mobile device:
It can be a numeric code, which a cashier can accept as payment. Generating a numeric code can be as simple as concocting a number (4 to 6 digits, for security) and assigning that number as a coupon code at the point of sale (POS). When the cashier or customer enters this code, the POS system recognizes this as payment — just as it might a gift card or a house account.
It can be an encrypted bar code that enables a money transfer, as shown in Figure 13-8. A bar code performs the same function as a numeric code, except it can be scanned by an optical reader at the point of sale. Special Web services and dedicated software programs can create bar codes. Any mobile commerce company is capable of creating a bar code, and incorporating a bar code into a mobile display is the same as incorporating any other data.
A typical loyalty program involves going to a retail store that hands you a punch card or asks for your phone number in order to track your purchases so the store can reward you with a discount or freebie when you have reached a certain level of purchases. For example, if you buy twelve lunches at the local Chinese restaurant and get your card punched accordingly, you get the thirteenth for free.
A mobile loyalty program is similar to a traditional loyalty program, except that loyalty points or purchase units are collected on the mobile phone. Loyalty units can also be redeemed through the mobile device, using a form of mobile integrated payment or through an auxiliary system such as a Web site.
Setting up a loyalty program is just like implementing a mobile marketing program. Here are the steps:
Build a mobile database of willing customers (in this case, loyal customers).
Databases can (and should) be created from multiple data sources, including online information forms connected to your Web site, in-store collections, and direct SMS opt-in.
Establish a unit/reward system and set up a system that allows your customer to accrue points on the mobile phone.
This is best accomplished by setting up an app — see the sidebar titled, "The Starbucks 'loyalty card' on the iPhone" elsewhere in this chapter — or it can also be done through unique customer codes delivered through SMS. (This process would work within your POS or application provider's systems because they keep track of a customer's account and transactions.)
Distribute rewards based on consumer activity.
Tracking consumer behavior can be accomplished through a capable POS system, and incorporating that to the mobile channel is a function of database management.
Mobile gift cards function like regular gift cards, except without the physical plastic card. Using aspects of both mobile integrated payment and a system akin to mobile banking, mobile gift cards allow consumers to make gift card payments and check balances through the mobile device.
Mobile gift cards can be sold just as physical gift cards are sold, or they can be sold online or through the mobile device itself. Apps can facilitate the gift card distribution and redemption process (in fact, there are gift card apps available in the iTunes Store). One such app, developed by Wildcard, uses bar code technology for redemption. Other companies, like Target, accept the gift card mobile simply by making gift card information available on the Web, and thus accessible through smartphones. In this sense, the only technology needed to enable the sale of mobile gift cards is the technology needed to implement and redeem mobile coupons.
Note
Mobile gift cards can also be reloaded easily, through mobile banking or at the point of sale, and can be transferred or shared.
The gift card is accomplished through a bar code or a numeric code — for example, the Visa and Neustar's 2D bar code program is based in gift cards — and is powered by a platform that links the two functions. The process of creating mobile gift cards also allows retailers and gift card providers to streamline their gift card development and distribution systems. Fifth Third, an electronic payments and credit, debit, and gift card processing services provider, is using Transaction Wireless's wGiftCard suite of products to target national retailers and restaurants, as well as local and regional merchants. The mobile channel allows for such cross-brand aggregation.