Apple’s new patent application for wireless point-of-sale commercial transactions obviously builds on the existing Starbucks-on-iTunes venture—the patent description even mentions coffee—but the proposed system for placing orders from your iPhone or iPod appears to be a lot bigger than Starbucks.

Here’s how it works: you walk within range of a store and place an order right from your iPhone or iPod. The store receives and processes your order, then places it in a queue. That’s one of the benefits right there: you don’t wait in the queue—your order does.

Another benefit is that complicated orders can be reduced to a single button on your device. Hmm, will today’s button press be “cheeseburger-no-onions-no-mayonnaise, large fries, and small strawberry milkshake” or “turkey-on-rye-extra-pickle, cole slaw, and decaf-coffee-two-sugars”?

Wells Fargo already does something like this. Sign in to some Wells Fargo ATMs and you’ll see a button that more or less says, “same as last time?” If you withdrew $120 from your checking account last time, pressing that button will do the same thing with a single button press. Like Amazon’s patented One-Click purchases—which Apple licensed for the iTunes Store—it makes the transaction pleasant and wonderfully simple.

And while you’re waiting, your place in the queue is displayed on your device, along with the estimated time remaining. Time it right, and you can walk in to scoop up your order just as it comes up, then walk right back out, coffee or whatever in hand. Very nice.

But how does the money work?

…An indication of the selected item is then wirelessly forwarded to the participating merchant who confirms that there are sufficient financial resources available to the consumer to complete the transaction…

— Description, U.S. Application 20070291710, December 20, 2007

How do merchants determine whether you have sufficient financial resources?   The patent doesn’t discuss this. It’s possible that your device transmits your credit card number securely to the merchant. It’s also possible that a pre-paid arrangement is built into your device to limit it to only those transactions you can afford. Apple already has your credit card information if you’re a .Mac member or have an iTunes account. It’s likely that you’d have to sign up for an Apple service of some kind to participate in these wireless commercial transactions.

Would Apple play a role in those transactions?   On the one hand, sure, a slice of every transaction would be great. But the more Apple places itself in the role of middleman with open palm extended, the more resistance it’s likely to meet from the merchants, unless the business proposition Apple is making is compelling enough to counter that resistance. Apple doesn’t necessarily have to benefit from each transaction, since it will already profit from selling the devices, and from selling the back-end systems to the merchants. But even a tiny piece of that business could prove lucrative.

How does the merchant benefit?  Making customers happy is the most obvious benefit to merchants, and customers who avoid standing in line or fumbling with orders and payment will definitely be happier. Taking and fulfilling orders more quickly can mean more business and more profits. Creating richer relationships with customers is also attractive for merchants because it brings customers back into the store.

Richer relationships generally means storing information about you, where you shop, and what you like.

… to store data that includes a customer preference file listing customer preferences…

[...]

…a list of establishment recognized customers listing those customers having previously contacted the establishment;a second customer preference file listing customer preferences for the customers on the list of establishment recognized customers; anda second customer history file listing items previously selected by each of the customers on the list of establishment recognized customers…

— Description, U.S. Application 20070291710, December 20, 2007

So, like much of the emerging digital world, participating in these wireless commercial transactions will entail giving someone else your financial information, and allowing them to track your shopping habits. Whether this is an acceptable tradeoff is up to you, but if works like those Well Fargo ATMs, it’s an attractive proposition.

Update: Consumer Passion makes several good points about potentially unhappy customers, including those waiting in line without iPhones “getting a bit snarly when they see all the Apple folks getting special treatment”.

Friday, December 28th, 2007, 3:32 am    Trackback.