In the real estate business they have a saying: Location is everything. The same might be said for mobile payments. Which is why it pays to know about the technology known as “Geofencing.”
On one level a rather simple solution, Geofencing involves the creation of a virtual perimeter using GPS coordinates. Based on the latitude and longitude of the device, it can be determined if its user is inside or outside the perimeter – or crossing in or out of it. And assuming that the user has opted in to a relevant app on their device, they can be selectively communicated with in relation to this pre-defined perimeter.
“We recently made a demo geofencing application with a perimeter set to 50 meters from the center of our office,” explains Zoltán Ács, director of research and development at Cellum. “And whenever I arrived in the parking lot, I get a message saying ‘Welcome to Cellum.’”
By pinpointing users entering a particular location, geofencing allows merchants to not only greet potential customers as they arrive or pass by, but to send them a range of location-relevant offerings and other messages.
It can also be used along with other technologies such as Bluetooth low energy (BLE) to add an extra level of location specificity. So while a BLE in-store “beacon” may be able to determine the distance to a nearby mobile device with an accuracy of a meter, with the addition of GPS information that accuracy can be refined to a matter of centimeters – virtually the same as near field communication (NFC) connections involving the “tap” of a mobile phone against an NFC terminal.
At the same time, cautions Ács, it needs to be remembered that the “S” in “GPS” stands for “satellite,” and that within most buildings and indoor spaces GPS signals aren’t strong enough to be effective.
But this does not mean that geofencing will be limited to merchants sending “hyperlocal” ads and other such offerings to prospective customers and clients as they enter or pass by a certain perimeter. It can also play a direct role in many mobile payment scenarios, for example by letting a payment app “open a tab” complete with a 10% discount for a regular patron even before they walked through the front door of their favorite restaurant, an offering that both the patron and restaurateur could find difficult to refuse.