What does Geo-location mean for Mobile Payments? Everything.

Geo-location is one of those buzz words that continues to be used in the world of payments. Many large technology players are putting a lot of investment dollars behind geo-based payment applications. The power of proximity, as I like to call it, may be the key factor to bringing mobile payments to mass adoption.

Before we can understand the benefits of geo-driven payments and the different applications of geo-location, let’s first define what geo-location means. Geo-location is nothing more than the process and technology of locating an object’s geographic location. Smartphones use geo-location for a variety of applications – mainly as handheld global positioning system (GPS).

As smartphone applications continue to evolve, many developers and tech players have started using geo-based properties in many of their software applications. From social media, to transportation, to weather and even news applications, location based services are readily available in your App Store today. This is expected to increase.  Many large tech players have already begun productizing payment applications based on geo-location. 

I have sat through plenty discussions and webinars about the future prominence of mobile wallets and other mobile commerce solutions over the past couple of years. Many consumers and experts believe that big players like Apple and Google will initiate the shift from physical wallets to mobile wallets, and this may very well be true. At least it’s going to be a big part of the shift. 

But what if what we were waiting for was something more than just the big players who are synced to just about every part of our lives? What if the shift will be decided by something more than just an integrated platform? Convenience hasn’t been a huge factor. In fact, I can argue that taking a card from your wallet and swiping it is just as easy and convenient as taking your phone out and tapping it. So where is the real value in mobile payments? It’s in the marketing. 

Consumers will really start to adopt mobile payments when they are incented to by receiving offers and discounts. And this is where geo-location plays such an important role in our payments ecosystem. If consumers can receive offers, discounts and incentives to pay with their phone – there is real value there. 

Geo-location is at the center of most of the mobile commerce technology these days. The investments being made in beacons and Bluetooth (BLE), Near Field Communications (NFC) applications, and consumer-initiated check-in applications is at an all-time high. Companies like Apple, Google, PayPal and Square are all making major investments in geo-based technologies – all of which revolve around that honing device in our pockets – our smartphones.  

Geo-location has made it possible for retailers to provide a seamless and secure way to market directly to their consumers. What makes it even more affective, is that this marketing isn’t happening through a costly television advertisement, phone call or an annoying online banner ad, it’s based on your proximity to the store. The consumer has already met the retailer half-way. The retailer now has an opportunity to seamlessly incentivize the consumer to walk in, shop and buy, sometimes without ever making a line to pay. 

With marketing being at the forefront of driving mobile payment adoption, and with geo-location being at the forefront of mobile loyalty, offers and incentives, it’s easy to see how the two are connected.