A Brand New Wallet for a Brave New World

Following the official announcement about Google Wallet in May, speculation abounded on the Internet. Articles quoting security experts, payment specialists and technology consultants either painted the technology in a good light or tried to poke holes in its innovative platform. Will hackers find a way to crack the security? Will consumers really embrace it, or is Google Wallet way ahead of its time? The near-field communication (NFC) technology used in Google Wallet is the same concept as contactless credit cards which are already used by many consumers today, so the payment technology itself isn’t actually new. But using it on a cell phone and adding the variety of marketing capabilities Google will be offering; now that is where the true innovation kicks in.
 

“NFC is a smart version of what some call RFID or contactless payments,” says Bob Egan, CEO of the advisory firm Sepharim Group, who has been covering the mobile industry for more than 20 years. “The technology has been around, and there are standards behind it.”
 

At the end of last year, core specifications were put in place for NFC, enabling technology vendors to start building products around it, according to Debbie Arnold, director of the NFC Forum, and this is where Google Wallet takes it up a notch.
 

“Google is adding the marketing element through couponing and loyalty programs, and that is where we think the technology will eventually move toward,” she says, explaining the specifications are built on ISO (International Organization for Standardization) standards to enable global interoperability for NFC.
 

Additionally, with the introduction of smartphones such as the iPhone and Android devices, the ability to pay via a cell phone is becoming more acceptable to consumers. “The evolution of the cell phone in the past four of five years has gone beyond simply making calls,” says Egan. “Triggered by the iPhone, now people are checking their bank accounts, making purchases and reading books on their phones.”
 

While the initial launch of Google Wallet only includes the Nexus S Android phone from Sprint, experts believe additional phones offering the NFC chip will be made available in the future, especially with the impressive line-up of technology vendors and retailers on board with the project, including Sprint, First Data, Citibank, MasterCard, Hypercom, Ingenico, VeriFone and VIVOtech.
 

“The line-up of partners is really more than any technology offering out there now,” Egan notes. “You have an Internet company who is reinventing itself to have a position of interest for payment and direct advertising in retail brick-and-mortar stores. The team they have put together with complementary skills gives them the best chance of making something work that I have seen so far.”

 

A variety of retailers are on board for the September launch, including heavy hitters Macy’s, Bloomingdale’s, Toys “R” Us, and Walgreens. The launch has also earned buy-in from several restaurant operators, such as Peet’s Coffee & Tea, Subway and Jamba Juice.

“I think Google Wallet brings a lot to the table in terms of convenience to customers, improving speed-of-service and just making the shopping experience easier and more fun, especially when you look at the features with the e-coupons, Google Offers, loyalty programs and SingleTap,” says Robert Notte, vice president of IT at Jamba Juice, whose company is set to go live with the technology this month. Google Offers is a program similar to Groupon and LivingSocial. “It also provides us the opportunity to engage in a more frequent and deeper relationship with our customers, and increase our brand awareness, especially on the Web,” says Notte.
 

From an IT perspective, Notte believes this is putting Jamba Juice at the forefront of leading technology. “This is a transformation of how consumers are going to pay for product, and I think it will also revolutionize the customer shopping experience.”

 

What Google Wallet is offering goes far beyond a payment mechanism. The new technology, known as SingleTap, will allow a consumer to load loyalty program and credit card information into the Wallet, as well as coupons acquired from the Web or interactive posters. When paying at the retailer, a single tap of the cell phone will register the payment, loyalty points or redemption, along with any coupon available, all at once.
 

“We think this will improve speed-of-service and the time it takes to complete a transaction at the point-of-sale, and being a quick-service restaurant (QSR) that is very, very important to us,” says Notte. “The integration of offers, promotions and coupons is also simplifying the process.”
 

Coupons can be obtained via the Web or interactive posters that will be going out at some point this year. For example, if a consumer searches Jamba Juice on the Web, an offer will likely appear in the search, Notte explains. They can click on it, authenticate who they are and that they have Google Wallet, and it will be saved directly into the wallet.
 

“There will also be interactive posters with NFC chips on them so if a consumer sees a poster in the mall and taps their phone with Google Wallet, they can acquire that offer or coupon,” he says. “We haven’t decided what offers we will be rolling out, but it will be targeted local coupons, and we will track them to see the redemption rates.”
 

Jamba Juice may also consider using the loyalty program features available with Google Wallet. “This gives us another opportunity to be successful, and it is very convenient for the consumer because it’s all saved in the Google Wallet.”

 

Security on the part of the retailer does not change very much because there is little difference between someone paying with a credit card, contactless card or with a telephone, says Notte. Once it hits the point-of-sale, payment is processed the same way as payment from a credit card swiped on a magnetic stripe reader.
 

“One of the benefits to the foodservice industry, or any industry using NFC, is we believe this is actually more secure for the consumer than your traditional credit card swiped at a magstripe reader,” he explains. The credit card information is stored on the phone in a secure element chip, which is reportedly tamper proof, and the chip is turned off unless the phone is turned on. So while the phone is in sleep mode, the chip is not active.
 

“Once you turn the phone on and activate Google Wallet, then the chip becomes active,” says Notte. Google Wallet requires users to set up a Google Wallet PIN that must be entered before making a purchase. This PIN prevents unauthorized access and payments via Google Wallet.

 

The initial launch for Jamba Juice is in New York, San Francisco, Los Angeles, Chicago and Washington D.C., so more than 200 of Jamba Juice’s roughly 740 locations will be equipped to accept Google Wallet. But since there was no pilot stage, Jamba Juice began preparing for the September launch in May 2011, and started installing the hardware and software in July 2011.
 

Within the IT team, five people were involved with the setup, which included installing new hardware, upgrading software and training team members, Notte explains. The team installed NFC readers from VIVOtech at the participating stores, and upgraded their POS software (Aloha by Radiant Systems) to a newer version, which contained logic for the NFC payment and offers.
 

“It’s about working together to be successful because there was a very short time line to get the technology into a lot of stores; and because it will be facing the consumer, it is one of those projects that just can’t go wrong,” Notte says, explaining his team worked with Radiant and Google to define the specifications and requirements for the changes on the POS, and with its credit card processer, Fifth Third Bank, to make sure the transactions would be authorized and settled.
 

Jamba Juice’s development team also worked with VIVOtech to learn about the technology and prepare for testing, and to determine where to mount the NFC readers. “Because we don’t have the luxury of a pilot, we set up labs at our headquarters to do the testing,” says Notte, which took into consideration any disparities in hardware across Jamba Juice’s stores.
 

Jamba Juice signed an initial contract with Google, and will be testing and evaluating how the technology works and what results can be measured from it. “We will probably look at the number of transactions and the average ticket with Google Wallet to see if consumers are spending more,” Notte says. “We will also look at any customer complaints or compliments. Overall, the average check, speed-of-service, and rate of redemption for coupons or offers will also be evaluated.” Jamba Juice and Google will promote the technology via advertisements and in-store signage at participating locations, including through Web ads and Google Offers.

“Right now only the Nexus S phone has the technology so it’s a small consumer base, but as more and more smartphones come out with the NFC chip, I think it will definitely drive the wallet technology,” Notte explains. “I believe the technology is coming, and the sooner retailers prepare for it, the better.”

 

Over the past few years, Jamba Juice has extended its innovation from recipes and product development to enter the hospitality technology arena as a leader – and the Google Wallet launch is a perfect example of this leadership.

 

“When times were tough with the recession, a lot of companies were holding back,” Robert Notte, vice president of IT at Jamba Juice explains. “A lot of our innovation has been less consumer facing and more back of the house.”

 

Notte says the company has done a lot with its intranet and communications portal to facilitate better enterprise-wide communication. In 2009, the company signed a Microsoft Enterprise Client Access License Suite agreement to deploy products including Microsoft Office SharePoint Server for improved workflow processes and communications.

 

“Not only did we implement SharePoint, but we did a lot…focused around improving communication through the system, and it has since been upgraded and enhanced,” Notte says. “We’ve also done a lot with implementing a labor management and workflow management system.”

 

The company also implemented Kronos workforce management in 2008, and since then labor as a percentage of sales has dropped significantly. The system, “allowed us to implement the changes in labor, such as being more specific with how much labor should be required based on sales, and how long is should take to make a smoothie.”

 

Right now, in addition to the Google Wallet launch, Jamba Juice is focused on automating offsite sales, and the company is also looking at digital menu boards, digital signage and a mobile point-of-sale for line busting.

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