We’ve been hearing predictions like this for years. Recently, Juniper Research estimated that worldwide mobile payment volume would reach an incredible $240 billion this year. By 2015, Juniper predicts, worldwide mobile and point-of-service (POS) terminal payments will reach an even more incredible $670 billion.

And yet, we’re really not seeing physical retailers move to adopt POS technology.

Yes, a few physical retailers are trying out new POS technology — Office Depot, for example, just announced it has teamed up with PayPal to experiment with letting customers pay using their phone number. But this kind of toe-dipping leaves us quite far away from widespread adoption.

Is that because the technology just isn’t available yet? No, the basic technology is no longer a barrier. NFC technology has developed significantly and Internet security is advanced enough to enable secure payments. Even paying via mobile phones using your carrier contract for collection was possible a long time ago and has been used around the world (it’s very common in Japan and has been for years), so that’s not what’s holding back mobile payments.

The slow adoption isn’t due to a lack of investment or innovation among technology vendors, either. Many companies, big and small, have been pouring a lot of money into this market, intent on becoming market leaders and making their platform the end-all-be-all standard. But no one has truly acknowledged the complexity of today’s retail point of sale process and what is required to enable reliable, and scalable mobile payments (and mobile services, for that matter, such as social applications, coupons, loyalty programs) at the retail point of sale.

Costs to integrate new and legacy technologies

One key reason retailers aren’t rushing to deploy mobile payment systems is that they see the cost of the solution as too high for the benefit. Even solutions that do not require new hardware pose significant costs to the merchant through fees and overhead. In fact, the purchase of a new terminal, an NFC reader, or other piece of hardware will likely be the least of a retailer’s expenses.

Because today’s retail systems are so inflexible, the integration of any third-party systems will result in a huge IT expense for implementation. The customization required so that all components of the point of sale system (including inventory management and payment processing) interact with a new mobile payment platform without disrupting the operation of the existing systems is cumbersome and expensive due to complex software integration.

The retailer’s cost to add even one type of mobile payment technology (such as Google Wallet) is currently very high, and since the market is so fragmented, adopting just one of the mobile payment platforms will only address a tiny portion of the market. To pay with Google Wallet, for example, customers have to have a specific phone model and one of the two credit cards that are currently supported.

Retailers can’t absorb these costs. For us to see a real mobile payments revolution in retail that provides added value to the consumer, retailers will need to integrate additional services such as coupons and loyalty rewards, each requiring its own associated customization costs.

But physical retail is at a critical point these days. It’s lost a lot of ground in the war with online retail. To stay in the game, physical retailers will have to start offering added values to clients that they do not offer today. They’ll need to have real-time control over their inventory, and they’ll need high quality information about their clients at their fingertips.

In today’s technology infused world there are more and more disparate systems and technologies that a business needs to remain scalable. From accounting and other internal systems to external web-based providers of leads and information such as Groupon, Squarespace and others.

So what exactly are the costs of this kind of integration?

The investments typically required include:

1. Restructuring the inventory data: mapping products and characteristics, eliminating overlap, regrouping and sorting of items
2. Restructuring client data: creating a uniform data format for the clients of all branches and departments
3. Physical implementation: although smaller in order of magnitude than an implementation of a traditional inventory and POS system (there is no need for dedicated hardware and servers), you still need to make sure that all the devices that will be running the web solution are available and that the peripherals are compatible
4. Training employees and management to use a new system and a new approach to dealing with the data.

Redefining the retail industry’s “operating system”

Having real time access to all of your inventory, and having real time access to data about your customers’ purchasing history and habits, including customers that are in the store at the moment, will help physical retail remain in the game. For example, Amazon has been applying sophisticated algorithms in order to offer additional products to customers during their browsing experience to increase sales. A new “operating system” for retail that provides companies with access to real-time data of inventory and customers is a must in order to offer such service to users in the future.

Because of a lack of industry standards, retailers can’t afford to gamble and choose one standard of mobile payment over another – they need to be prepared to offer their customers the ability to pay through whatever means the customers want.

Take the online commerce space as a perfect example. Platforms like Magento, Demandware, Shopify and Venda, allow easy integration with third-party software, so that payment solutions like PayPal, BillMeLater, and Google Checkout are thriving and being adopted by online retailers and consumers alike.

The very good news is that we’re seeing a new generation of retail “operating systems.” For retailers who are using web POS software, accepting a new form of mobile payment can now be as easy as installing an app. There is no need to change payment processing vendors, rebuild integrations with inventory management systems, or incur any other hassles. In the last year we’ve seen that large retailers are beginning to understand the need for a cloud-local based comprehensive POS solution.

Still, it’s ultimately a game of wait-and-see for those of us working in this market. The future of the mobile payments industry is in the hands of retail companies. If they embrace the potential economic advantage and convenience of the new, more cost-effective technologies, they have a lot to gain. Retailers need to make the choice to start the retail revolution.

Kris Hiiemaa is CEO of retail point of sale software and inventory system provider ERPLY.

[Top image credit: Walmart Stores/Flickr]

Filed under: VentureBeat

The rule of thumb is that a few crucial conferences are a must, and that it’s better to go all-in for the best events, like CES, then to spread yourself thin at a lot of lackluster ones. And CES, which begins this week in Las Vegas, is definitely one of the events for tech startups to attend.

It’s hard enough to make a splash with a six-figure budget, so how do you make an impression as a startup at an event like CES? What can you do with a small budget and limited human resources? Luckily, you don’t need a booth to make an impact, you need a plan.

What’s most important about CES is that it’s the one place where everyone in the industry gathers for a few days each year. That means a wealth of opportunities for new business meet-and-greets, a forum to connect with people you’ve only communicated with via email, and a chance to pitch your story to the media.

If you’re spending the majority of your time looking at other people’s products at CES, then you’re not pushing your own. The name of the game is booking 50 meetings in one day instead of 50 days of meetings. If your goal is business development then your focus is building relationships, and there’s nothing quite like meeting face-to-face to do that. When you meet someone the second or third time, and feel like you know each other, that’s when the big integrations happen.

Here are a few other helpful hints to consider for CES, and for any other big conferences on your schedule this year. They aren’t earth-shattering revelations, but they’re often things that busy entrepreneurs forget time after time:

Early bird specials: Show up a places early because there’s a good chance others will too. Hotel lobbies and bars will be packed with people killing time before the show or events start — a perfect opportunity to meet them before things get too hectic.

Be visible: Be your product, your platform and your brand. Wear that company t-shirt, it’s a sure-fire way to strike up a conversation quickly and create a presence (so bring a few extras to give out!).

Be frugal: You have neither time nor money to waste. Book the low cost flight, share an Airbnb with other start-up folks. Don’t have a booth? Tap into your partners to see if you can also share their space.

It’s not a holiday: Focus. Stick to a schedule. Let people know what parties you’ll be attending and forward them invites. You need to go where the people you want to meet are. Ask around. Ask potential partners and journalists where they will be. Ask VCs. Read blog posts about conferences in your field. Organize.

What happens in Vegas stays in Vegas … but it shouldn’t: There’s no point in treating this as a one-off. Be sure to follow-up with the connections you’ve made and work those relationships for when you meet them again.

When the show’s over, you need to come away with more than a stack of business cards, you need to have built some solid relationships. Maybe there’s a deal or two in the bag. That’s when you’ll know that CES was a winner.

Henrik Lenberg is the Vice President of Platform at SoundCloud, the leading social sound platform that lets anyone create, record, promote and share their sounds on the Web. In this role, Henrik is responsible for SoundCloud’s partnership integrations and business development. Henrik joined SoundCloud in 2009. You can follow him on Twitter at: @lenberg.

Filed under: Entrepreneur Corner, VentureBeat

Verified Accounts are Twitter accounts held by persons of note — musicians, actors, celebrities and other public figures.

“This opens the door for developers to create new ways for fans to interact with the actors and artists they love and to build the Twitter experience into music and entertainment services,” a Twitter spokesperson told VentureBeat this morning.

In this pilot program, Twitter is distributing Verified Account public data to music and media services, device manufacturers and developers to give them richer ways to engage their users — and to give the Twitter brand a bit of a boost, no doubt.

The first participants in the pilot program are The Echo Nest, a music app platform; Gracenote, which offers a suite of “entertainment solutions” for gadgets and cars; and Rovi, a tech company with a focus on Hollywood and home entertainment.

These three partners, “will scale the distribution of Twitter account data for integration in consumer-facing apps,” writes Twitter employee Jason Costa on the company’s developer blog. “Developers in the Twitter ecosystem can now work with these three partners to integrate Verified Account @handles and Tweets into their music and entertainment services.”

The Echo Nest is integrating Twitter Verified Account data in its Rosetta Stone service (which supports multiple ID spaces). For example, using a bit of code as simple as twitter:artist:justinbieber will allow developers to show tweets from the Biebs inside an app.

Gracenote, which powers iTunes, Sony BRAVIA televisions, HTC mobile devices and Ford SYNC, will be doing something similar, as will Rovi, which is used by a plethora of consumer device manufacturers and service providers.

“Partnerships like these give music and entertainment fans the opportunity to interact with tweets from their favorite artists directly through the media services they use every day,” Costa concludes.

“We expect to add more partnerships to the pilot program, which will extend the Twitter experience to a new set of devices and applications.”

Below, you can see the new data in action on Echo Nest-powered app Discovr:

Filed under: dev, VentureBeat

Ryan Carson, the web design guru behind Carsonified, wants to teach you how to code. And he says he can do it in just five minutes using a web-based game.

Carson’s latest endeavor is Code Racer, a multi-player game designed to teach simple web skills through live-coding.

In an chat with VentureBeat, Carson explained that the game teaches total beginners how to code a basic web site in as little time as five minutes. Players can race each other to finish coding challenges, and along they way, they unlock rewards.

Code Racer joins a new genre of simple, interactive web tools that take novices through the steps of learning how to code.

One startup with a similar premise (though without some of the more obvious game mechanics), is Codecademy, which got its start with Y Combinator before raising a lightning-fast $2.5 million funding round. Codecademy is looking to increase its userbase with Code Year, a weekly program to turn web users into web coders throughout the course of 2012.

But Carson says Code Racer and Treehouse, its parent, are quite different from Codecademy’s offerings.

Treehouse, Carson’s code-and-design-focused startup lets visitors watch videos and learn basic web skills. The more you learn, the more badges you can unlock — and some badges, like the Advanced Node.js badge or the Rails Foundations badge, can earn you interviews with companies like Facebook and WordPress.

Currently, Treehouse employs eight full-time teachers to create videos for the site.

“Code Racer is kind of the next iteration of that,” Carson explained to us. “We can reach you through video, and we can also teach you through interactive gaming.”

In fact, Carson imagines that Code Racer, which itself is simply a weeklong hackathon-type project from Treehouse staff members, will eventually end up as part of the greater Treehouse product.

“We’re going to roll out a group Treehouse product so big companies will have a dashboard of their members, what badges they’re unlocking, how fast they’re learning, rankings,” Carson explains. “Code Racer would be good for groups to challenge each other.”

Carson gives us an example: Disney, he says, already has a rather sizable Treehouse account for its in-house development team. Code Racer “might be the perfect internal tool for group members to challenge one another and also have fun,” Carson concludes.

Late last year, Carson told VentureBeat he had sold the Carsonified events business to focus all his attention on Treehouse.

“We want to help people who can’t afford traditional education, want to change careers [or] don’t have access to cutting edge design/dev training at their school,” he said.

Carson also reveals that although Treehouse received very little initial funding (in the form of an angel round from some prominent Silicon Valley investors), the venture is already profitable.

“We’re doing $2 million [annually] in revenue,” he says. “We’re profitable, and we’re increasing revenue by a million dollars every three months.”

Image courtesy of Jolie O’Dell.

Filed under: dev

Learning to read notes it is quite hard and it needs a lot of practice to become really fluent. I am learning reading sheet music and built this app as a quick way to practice this skill.

Featuring both Bass and Treble Clef, this simple but effective app allows you to practice reading notes until you become fluent in “sight reading” music.

Valuable for students, musicians and session musicians who are looking to go pro or just anyone who wants to learn to read music!

view more

You’re safe from black nylon — we’ve searched long and hard to bring you the more interesting, unusual and attractive bags available across the web.

SEE ALSO: 10 Cool and Unusual Laptop Sleeves [PICS]

Have a look through the photo gallery for our hand-picked selection of brilliant bags. Let us know in the comments which of the options you’d consider.

1. OMGPwnies

OMG! ThinkGeek’s “pwnies” artwork looks fab on this case, which fits laptops up to 17 inches, along with a few other bits and bobs too.

Cost: $49.99

2. Plaid Doctrine Eco Tote

In addition to protecting your laptop, Plaid Doctrine’s Eco Tote also accounts for the planet. The water-resistant fabric is made from recycled bottles.

Cost: $449

3. Ruff Day at the Office

This sweet, stripy case features a veritable pack of adorable cartoon dogs.

Cost: $35.99

4. VAX Walden

With dimensions suitable for 17-inch laptops, this cool, modern case boasts an external side bag for quick access to smaller items.

Cost: Approx $130

5. Royal Canadian Correspondent

If the idea of vintage tech juxtaposed with high tech works for you, then you’ll like this brill bag.

Cost: $75

6. Patent Leather Carry Case

A striking design helps this playful patent leather case stand out from the crowd.

Cost: £155 (approx $250)

7. Speck A-Line

This bag’s unusual shape makes it a stylish, alternative option for 13-inch laptop owners.

Cost: $69.95

8. Pinstripe Messenger

Have fun with pinstripes when you carry this great messenger, which features two external and — count ‘em — six internal pockets.

Cost: $115

9. Nintendo Messenger

Gamers will enjoy this Nintendo-themed bag. With its reversible front panel, it’s practically two bags for the price of one.

Cost: $36.99

10. Harris Tweed Satchel

The ultimate in preppy chic, this Harris Tweed satchel offers some serious sartorial style.

Cost: £105 (approx $170)

BONUS: Red Fox

Finally, we’ve bonused this foxy bag because it might be a bit “out there” for most people, but anyone with the nerve to tote it will have tons of fun.

Cost: $52

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I consider Sublime Text 2 to be the spiritual successor to TextMate – particularly when the likelihood of TextMate 2 coming to fruition becomes bleaker and bleaker. When Duke Nukem Forever is released before TextMate 2, you know you’re in trouble! But that’s okay, because Sublime Text 2 is one of the fastest and most incredible editors to come out in a long time! I’ll show you my favorite tips and tricks today.

Sublime Text 2 is currently available for all major platforms: OS X, Linux and Windows.

1 – Get a Better Icon

In its defense, Sublime Text 2 is still in a beta state. The official icon will likely/hopefully change with the official release. Until then, Nate Beaty created an excellent substitute.

To integrate it, you need to replace the existing “Sublime Text 2.icns” file with this new one. On a Mac, browse to Sublime 2 in your Applications/ folder, then right-click and “View Package Contents.” Lastly, browse to Contents/Resources/, and drag the new icon in, overwriting the existing one.

2 – Bleeding Edge Versions

Sublime is in active development. If, like me, you want to use the latest possible version of the app, you can download the dev build. You’ll find that new (auto) updates are available every other day or so.

Download a dev build of Sublime 2 here.

3 – Access the Command Palette

Similar to TextMate, we can use Sublime’s command palette by accessing the Tools menu, or by pressing Shift + Command + P, on the Mac. Whether you need to visit a Preferences page, or paste in a snippet, all of that can be accomplished here.

4 – Lightning-Fast File Switching

Press Control or Command + P, type in the name of the file you wish to access (fuzzy finder), and, without even pressing Enter, you’ll instantly be transported to that file. While Vim and apps like PeepOpen offer a similar functionality, they’re not nearly as fast as Sublime’s implementation.

5 – How Did We Survive Before Multi-Selection?

Editors like TextMate have long offered vertical selection, which is quite neat. But, with multi-selection, you can have multiple cursors on the page. This can drastically reduce the need for using regular expressions, and advanced search and replace queries. Perhaps a quick visual demonstration is in order…

To enable multi-selection, you have two options:

• Press Alt or Command and then click in each region where you require a cursor.
• Select a block of lines, and then press Shift + Command + L.

6 – Indent Guides

It’s such a small feature, but I’ve always loved how Notepad++ on Windows displays indent guides; it makes the page much easier to navigate and format. Sublime Text 2 offers this ability, via a plugin created by Nikolaus Wittenstein.

To integrate this plugin:

• Download it
• Rename the folder to “Indent Guides” and drag it into the Packages folder. On a Mac, this path would be Application Support/Sublime Text 2/Packages

7 – Package Control

The steps outlined in the previous tip (#6) are a bit tedious, aren’t they? Instead, we can install the excellent Sublime Package Control, which streamlines the entire process.

To install “Package Control,” open Sublime and press Control + `. Next, paste the following snippet into the console.

 import urllib2,os;pf='Package Control.sublime-package';ipp=sublime.installed_packages_path();os.makedirs(ipp) if not os.path.exists(ipp) else None;open(os.path.join(ipp,pf),'wb').write(urllib2.urlopen('http://sublime.wbond.net/'+pf.replace(' ','%20')).read())

Don’t worry if you don’t understand the code above; just copy and paste!

Lastly, restart Sublime Text, and browse to Preferences -> Package Settings. If the installation was successful, you’ll now see a Package Control item in that list.

With Package Control installed, the process of adding new plugins and functionality becomes incredibly simple!

For a usage example, refer to the next item in this list.

8 – Alignment

If you’re the type who prefers to line up your equal signs – for example, in your JavaScript…

// Before
var joe = 'joe';
var johnny = 'johnny';
var quaid = 'quaid';

// After
var joe    = 'joe';
var johnny = 'johnny';
var quaid  = 'quaid';

…this process can be automated, via the Sublime Alignment plugin. Rather than downloading and installing it manually, let’s instead use Package Control (outlined in #7).

• Press Shift + Command + P
• Type “install,” to bring up the “Package Control: Install Package” option, and press Enter
• Look for “Alignment,” and press Enter to install it.
• You’re done; so easy! Type Shift + Command + A to auto-align.

This process can be repeated for all of the typical plugins we install, such as Zen Coding.

9 – Vim Fanatic

I’m a huge fan of Vim. The amount of power it provides is insane. The fact that I’ve switched over to Sublime Text 2 should speak volumes then!

If you’re using a dev build of Sublime Text (see #2 in this list), you can enable Vintage mode, which provides support for the Vi commands that we know and love — okay…some of us love. The rest of you hate it!

To enable Vintage mode, browse to Preferences/Global Settings - Default. Once this file opens, browse to the very bottom, and change "ignored_packages": ["Vintage"] to "ignored_packages": []. Next, restart Sublime, press the Escape key, and, tada: command mode!

10 – Distraction Free Editing

Sometimes, we need to filter out all of the additional fluff that gets in the way of our coding. Use “Distraction Free Mode” to take this idea as far as possible. This option is available, via the View menu. Select “Enter Distraction Free Mode,” or use the Mac keyboard shortcut, Control + Shift + Command + F.

11 – You Can Still Use TextMate Bundles

TextMate snippets and themes port over nicely to Sublime Text. You only need to drop them in the Packages folder — .tmbundle extension intact, and Sublime will recognize the files. This means that the entire catalog of TextMate themes will work in Sublime!

For example, I’ve been working with the (fantastic) Slim templating engine a good bit lately, and needed better syntax highlighting. Fred Wu created a bundle for TextMate, but, tada, it works perfectly in Sublime Text as well! If you’re interested, you can download the Slim bundle here; it includes both snippets and syntax highlighting.

12 – Custom Themes

The default theme for Sublime Text is excellent, but I much prefer a custom light and dark theme, Soda, created by Ian Hill.

Installation

As taken from the Github page…

“If you are a git user, the best way to install the theme and keep up to date is to clone the repo directly into your Packages directory in the Sublime Text 2 application settings area.”

Using Git

Go to your Sublime Text 2 Packages directory and clone the theme repository using the command below:

 git clone https://github.com/buymeasoda/soda-theme/ "Theme - Soda"

Download Manually

• Download the files using the GitHub .zip download option.
• Unzip the files and rename the folder to Theme – Soda
• Copy the folder to your Sublime Text 2 Packages directory

Activating the Theme

To configure Sublime Text 2 to use the theme:

• Open your Sublime Text 2 User Global Preferences file: Sublime Text 2 -> Preferences -> User Global Settings
• Add (or update) your theme entry to be “theme”: “Soda Light.sublime-theme” or “theme”: “Soda Dark.sublime-theme”

Example User Global Settings

{
    "theme": "Soda Light.sublime-theme"
}

Conclusion

The more I work with Sublime Text 2, the more I realize how incredible it is. But all of this would mean nothing if not for the fact that it’s an insanely fast editor, and, even better, it’s not finished!

After a steady stream of information in June, all has been quiet on the Facebook Project Spartan front in recent weeks. Originally, at least some thought the plan was to unveil Spartan in July — but that obviously came and went. It’s certainly possible we won’t hear anything until f8 in late September now. But one new bit of information has come to our attention that could be related. Say hello to BoltJS.

BoltJS is a UI framework that’s being built by Facebook for the purpose “helping developers build fantastic mobile web applications in HTML5 and Javascript,” as you can read for yourself here. It is written entirely in JavaScript and runs in the browser, meaning no backend processing is required. And guess where the focus of the project lies right now: mobile WebKit browsers — just like Project Spartan.

Here’s the description in developer Shane O’Sullivan’s own words from the project’s GitHub page:

BoltJS is a UI framework designed by Facebook to be compact, fast and powerful. It is written entirely in JavaScript and runs in the browser, needing no server backend. While BoltJS can be used in a progressive enhancement approach, it is primarily designed for UIs that are built mostly, if not completely, in the browser.

While it is the aim of the BoltJS project to support as many modern browsers as sensible, it is currently focused on supporting mobile WebKit browsers, with the intention of being the best possible development platform for mobile sites and HTML5 apps.

O’Sullivan is a software engineer at Facebook on the Client UI team. The other authors of the project are Will Bailey, Vlad Kolesnikov, and Tom Occhino.

BoltJS is built on top of Javelin, and plays nicely with Facebook’s current code, O’Sullivan notes. It also features modules that use the CommonJS standard. For all the other technical details, check out the GitHub docs page.

But here are a few other interesting things about the project. First, Facebook doesn’t seem to want to say a word about it. I asked them about it several hours ago after a back and forth about something else. So far, nada in response to this. That’s not surprising given what I’ve been told about BoltJS — namely that it’s still meant to be a secret.

While the documentation does reside on GitHub, the source code hasn’t been released to the public yet. The links on this page to the zip and tar source files don’t work. But I’m told that BoltJS is already being licensed secretly to third parties who are preparing apps to show off using the platform. At least one of those third parties is a major player in the consumer web space. Again, this sounds a lot like Spartan.

Also found on GitHub is a demo app built using BoltJS called “Weather App“. If it looks familiar, it’s because you own an iPhone. It is essentially the Weather app re-created using the JavaScript framework. Still think Facebook doesn’t intend to battle with Apple in mobile down the road?…

That’s all for now. More as we get it.

Update: As Holger Eilhard notes on Twitter, Google’s cache catches several other BoltJS examples that are no longer live. Among them: a few maze games.

ModoPayments’ simple and comprehensive solution for providing mobile payments is interesting and what’s more, its offer-based approach may have finally cracked the code for monetizing check-ins. This is something that mobile location-based service providers (LBSs) like Foursquare, Loopt, Gowalla and ShopKick have, no doubt, been laboring over since their inceptions. And while ModoPayments is, at present, a non-NFC mobile payments platform, they plan to integrate with NFC too, when NFC reaches retail maturity.

Based in Dallas, Texas and led by CEO Bruce Parker, ModoPayments is a startup with a goal to do exactly what their tagline says – “convert redemptions to payments and make payments mobile”. What exactly does that mean? First, know that ModoPayments definitely has a payments piece and I’ll come to that in a moment, but a supremely important part of their business plan is creating and tying value offers to the purchases they enable in order to enhance and promote their mobile payments solution. They create monetary savings that users can cash in on if they transact with ModoPayments instead of another tender.

It has often been stated that mobile payments are a solution searching for a problem. Indeed, what is the big deal about pulling a card out of your wallet vs. pulling your phone out of your pocket, to transact? Where is the value to drive the mobile payment other than convenience?

Modo thinks it has to do with offers and they have integrated a framework for redeeming merchant offers with their payments platform. This makes sense to me. If I had to choose between paying with my Visa card in my wallet or my Visa on my phone (that also happens to give me a big discount on the purchase) I think the choice is obvious. So right out of the gate, ModoPayments has tied a distinct consumer value proposition to their service in order to drive usage (they hope). Google Wallet has a similar concept. It will definitely be a motivator.

The platform makes it possible to, in the words of Bruce, “generate a mobile payment transaction at any location that accepts either Visa or MasterCard with no change to POS and no change to the phone that uses ModoPayments.” It can exist as an SMS or native app solution; customers can choose either touchpoint.

I’ve heard this one before, but their scenario is really simple and honestly sounds like it might work.

HOW DOES IT WORK?

First, a customer creates an account at the ModoPayments website and registers a credit card with that account. When it later comes time to pay for something at a participating location, the customer texts “VISIT” to the Modo short code or else they check-in with the Modo native app. (In the text scenario, Modo will try to triangulate on a customer’s network location. If they can’t locate them, ultimately they will just ask the customer via text—‘are you at X location’ and via process of elimination, locate them).

After Modo have verified that the location matches up with a supporting offer, they will create a randomized credit account number for that location which is good for one transaction only. They then load it with money that the merchant or other 3rd party has set aside for the specific offer.

Next, they will grab the difference still needed to complete the sale from the customers registered credit card. In essence, they are creating pre-paid card numbers that will only work for a limited time and that are loaded with money from both the offer provider and the customer.

Then, they send half of the account number to the merchant and half of the number to the customer. The two sides combine their numbers to create the actionable account number to complete the transaction. (The merchant half of the number may or may not be static and therefore might not even need to be sent).

Pretty tricky. So here they have tied a distinct merchant value proposition to their service—no costly POS change required plus a mobile marketing channel.

SHOW ME THE MONEY

Logistically, that is how they are enabling the mobile payment but another concept they are focused on is information sharing. Using the ModoPayments framework, users can track their entire purchase history, merchants can see anonymized purchasing trends to track/create effective offers and the location element will act as a security feature and help bolster the ability to relax chargeback percentages in order to turn those into profit.

For example, normally for “card-not-present” credit transactions (like Modo’s) an extra percentage is taken from the merchant who accepts these card-less numbers as protection against fraudulent purchases in case there is a chargeback.

Because ModoPayments has these sophisticated technologies that can prove exactly where a transaction is happening and by whom, and because they also control the randomized account numbers they can potentially minimize chargeback risk. This will allow them to work out acquirer relationships in such a way that they keep that usual 1% markup and turn it into profit. I am not sure how they are going to pull that off, but it’s a great idea.

MONETIZE CHECK-IN

I think the payments piece alone is cool and the info sharing piece is borderline scary but what I really zeroed in on is what this could mean as a payments solution that benefits the check-in concept. Customers can check-in with ModoPayments via text or native app, but Bruce said that other LBSs could also own the check-in part if they want. Modo is open to that.

So here’s the thing…if pulled off correctly, this service could finally monetize check-in in a way that hasn’t happened before. Modo could provide the framework for the offer and mechanism for transacting, while the location service could act as the visible marketing channel. That extra 1% could be sliced up a few ways so everyone could get a piece of the action. Then, it just becomes a volume game.

For example, a merchant has an offer and advertises that either directly though ModoPayments or within say, Foursquare. If the Foursquare check-in helps drive the offer redemption through ModoPayments, then they get a piece of that transaction, affiliate-style. It would therefore behoove Foursquare to help advertise it. This could be the part of their puzzle that has been missing and could be very attractive to the major LBSs while at the same time could help to drive ModoPayments adoption.

WHAT ABOUT NFC?

I’m rather pessimistic about NFC’s short term viability for completing mobile payments in the retail space. No doubt it will be a useful mechanism once the merchant value proposition is defined. As it stands, that has yet to be clarified for me, in toto.

Sure, consumers want it, but is that enough of a reason to validate merchant expense incurred purchasing and installing the hardware needed, just so a small percentage of early adopter consumers can leave their wallets at home? Consumer desire is one thing but there needs to be a clear, strategic and financial value for the merchant too, especially if they are footing the bill for NFC enablement (e.g. buying hardware).

It’s a big, credible expense and there are just too many unanswered questions in my mind to think that NFC payments are as close as the Google Wallet announcement would lead some to believe. Forrester’s Charles S. Golvin and Thomas Husson have said that

“Relying on an installed base of phones that is today indistinguishable from zero, a single payment system, a single card issuer, and a modest network of merchants capable of accepting these phone-based payments means that the near-term impact will be negligible.”

That’s why the POS-less concept ModoPayments has put together is a great interim step.

Don’t get me wrong, I think eventually NFC will embed and payments solutions will have to incorporate with it and account for it. It’s definitely one way to solve for the physical proximity needs of a mobile transaction. It’s still a couple of years away though. That’s just my opinion.

And really, I’m not sure consumers care if their mobile payments solution incorporates NFC, 2D barcodes or a freakin’ chip in their butt…they just want an easy way to purchase that matches the evolving mobile lifestyle of traveling light, planning on the fly and managing on the go. It’s just how people are staring to do things. We all know this.

Ok, they might actually care about a chip in their butt. You get my point though.

WHAT’S NEXT
ModoPayments has a few pilots scheduled to launch in Dallas in the coming weeks, so we’ll hopefully be able to get a look at how this concept is playing out in the real world. I will definitely be watching for when and how those pilots work out. They will also be presenting at Finovate 2011, in New York later in September. Until then, check out their light and clever little video at modopayments.com.