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    Pay Dirt

    Futuristic technologies fight to replace the wallet.

    It started innocently enough.

    The venue was the 2001 NACS Show in Las Vegas, a city known for hosting top prize fights. But this event never reached the feverish pitch of a pugilistic slugfest. No, this was, at best, an intellectual scuffle between two respected high-tech veterans.

    In civil tones, Patrick Schultz and Anton Bakker (who wasn't even scheduled to speak) dueled over the superiority of each one's respective payment gizmo — Schultz's cell-phone method, Bakker's radio-frequency solution.

    "I've been through radio frequency, touchscreen and so on," said Schultz, who is business development director at Israel-based Cellenium. "I've seen these technologies tested, deployed and integrated, and I think the cell phone offers the greatest potential for the merchant and consumer. More and more, cell phones are viewed as personal assistant tools, devices that can be used to purchase goods, to receive rewards and to cross-merchandise."

    Bakker, president and CEO of Norfolk, Va.-based Outsite Network, envisions an extension of the popular Speedpass program propagated by Exxon Mobil Corp. Customers would obtain loyalty rewards, conduct business through radio frequency key rings or car sensors, and enjoy the benefits of being recognized by name at the gasoline pump.

    While ExxonMobil tabs Speedpass for expedited payment, Bakker sees RFID's future as a loyalty device. "The hypermarkets are coming and you don't have time to sort out payment systems," he said, noting the costly challenge of interfacing proprietary point-of-sale (POS) platforms with wireless commerce technology.

    "You've got to focus on loyalty and not worry about payment, because everyone knows how to pay — that's not a big issue," he said. "The real issue for convenience stores is not payment, but that hypermarkets are coming and they have sophisticated loyalty programs."

    "Everyone is talking about the electronic wallet," said Scott Hartman, who, when not busy as operations vice president at York, Pa.-based Rutter's Farm Stores, doubles as head of the technology committee at the National Association of Convenience Stores.

    "Credit and debit cards were the first because they authorized monetary transactions without the need for cash," he said. "The consensus is that tomorrow's business will be done with an electronic wallet that will utilize multiple tools, including possibly cell phones and RFID.

    "People are going to be wearing digital jewelry," he predicted.

    One major refining/marketing company not taking sides in the RFID vs. cell-phone debate is Alon USA. The Dallas-based operator of 174 7-Eleven stores and distributor for 1,700 Fina-branded units plies away at its Texas laboratory, crafting a full-scale, high-tech payment package that would feature pump screens, radio frequency rings attached to the car and mobile payment via cell phones.

    "Different customers want different things," said Alon USA CEO Jeff Morris, who is working with Cellenium. "Certain customers will find cell technology attractive, certain folks will prefer RF technology, certain folks will want both and yet others will want to pay the good old-fashioned way — with cash and credit cards.

    "Everyone in the convenience industry is talking about survival in this environment of high-volume retailers. We're not talking about surviving, we're talking about thriving," Morris continued. "Customers in survey after survey want convenience and competitive prices. These payment technologies are one piece of the puzzle. We can create a buying experience that is not only competitive but exceeds that of most high-volume retailers."

    Obstacles Ahead

    Cell payment and radio frequency identification are proven hits in parts of Europe, Israel and trial markets in the United States. But like many good things, problems threaten broader rollouts. "How am I going to support all this stuff?" wondered Rutter's Hartman. "There are no uniform standards. This is where standards will have to come into play and right now there are no standards.

    "Ideally, we would like one RFID reader as opposed to needing 29 different key rings for 29 different RFID programs. That's not going to fly."

    Truth is, retailers, especially those selling branded gasoline, have invested heavily in the proprietary operating systems that distinguish a Shell system from an ExxonMobil or a BP. "You have all these different suppliers and different points of payment," said Outsite's Bakker. "If you're a dealer of a major brand, you can't advance your business because you're stuck with their proprietary system and changing it comes with a serious cost."

    So while ExxonMobil pushes Speedpass and Phillips Petroleum Co. pilots PHILPASS, few operators can afford to overhaul their POS and back-office systems to accommodate a uniform RFID program that would allow customers to wave the same wand at stores other than their own.

    Until such standards are achieved, RFID will be better served as a loyalty tool, said Bakker. "Customers are not screaming for new payment options, they're screaming for loyalty, for rewards," he said. "Our technology blends media with loyalty so that the gasoline dispenser can greet the customer and know that customer's buying habits."

    Cellenium's Schultz doesn't see the same obstacles confronting cellular commerce. His applications platform conforms to protocols of wireless giants like AT&T, VoiceStream and Verizon, and the company will install software that links Cellenium's back office to the retailer's POS. What is less clear with the Cellenium solution are the fees. As it is now, retailers typically pay a minimum 3-percent transaction fee on all major credit cards. Since the credit card is encoded into the cell phone, those fees, at least for the foreseeable future, will remain. In addition, merchants pay Cellenium to manage the cell-phone payment and loyalty applications.

    Looking to diversify the diverse operating and payment systems, Palo Alto, Calif.-based Sun Microsystems Inc., recently unveiled e-GasStation, a Java-based architecture that integrates retail devices such as gasoline pumps and POS systems to support modern e-business practices.

    "Because of the huge amount of legacy equipment in the field, it would be too expensive for retailers to junk everything and buy new equipment," said Nick Weston, Sun's strategic development manager of corporate accounts. "What we are trying to do is, instead of the retailer buying new equipment, he can wrap all his devices under a Java-based box. It's no longer a complete tear-out-and-replace.

    "With all the mergers, even the oil majors are struggling to fully integrate the forecourt," he added. "The lack of standards is a problem systemwide."

    And so, while futurists tout the promises of tomorrow, Rutter's Hartman and other realists say cash isn't vanishing any time soon. "A certain portion of the economy operates on cash," he said.

    In the end, it will not be the slick sellers of tomorrow's technology that will decide which wireless payment flourishes. Said Hartman: "Consumers will say what's convenient to them and what they like. That's the way it's always been."

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