New 'Beacon Shield' Rules Should Not Hurt Merchants: Shopkick CEO

A new Bluetooth standard limits how beacons can track and deliver messages to people near stores, but this may not be a death knell to proximity-based payments and marketing.

Retailers should already be using Bluetooth beacon technology with privacy in mind, said Cyriac Roeding, CEO and co-founder of shopkick, a card rewards company and early adopter of Bluetooth beacons.

"[The new specifications] don't have much effect on the retailers that are already doing it right because they know that what makes a beacon a truly usable asset is how it is built—and the layer of security and service infrastructure included prevents just anyone from being able to send messages through the signal," Roeding said.

The Bluetooth 4.2 specifications provide more user control over how to receive messages from beacons, which are devices retailers plant inside their stores to transmit and accept payments. Bluetooth 4.2 will allow consumers to opt into alerts, meaning they will have to "whitelist" a specific store to receive messages, similar to opting into telemarketing. That would potentially hinder how aggressively retailers can use beacons, which are becoming a popular way for retailers to mix mobile commerce with in-store shopping.

Shopkick's system, called shopBeacon, welcomes consumers when they enter the store and shows location-specific deals, discounts, recommendations and rewards. The system's users, which include retailers as large and well known as Macy's, install beacons on their walls or other flat surfaces.

"Since we launched our shopBeacon product, we have made it an opt-in only service and so far, consumer response has been great and has helped shape shopkick's content marketing strategy to ensure we help partners reach people when it's most helpful," Roeding said. "As beacon technology grows, it will be key for any organization to stay ahead of mandatory regulations, listen to user feedback and continue to tailor their beacon strategy as people become more familiar with how it works and what value it can provide them."

Under the new Bluetooth specifications, a shopper who opted in for mobile app beacon alerts from Store A would not receive similar messages when walking in or near Store B, nor would their mobile phones be "awoken" by beacons in another store unless the consumer proactively said that was OK.

The new restrictions are actually a good thing for the merchants who invest in beacon technology, because they prevent competitors from piggybacking on another merchant's beacons, Roeding said.

"Imagine an e-commerce giant using the beacon at a mass brick-and-mortar retailer to deliver information that persuades shoppers to leave and buy online. That's a nightmare for physical retailers," he said. "A solid security layer prevents this scenario and ensures that the business where beacons are installed has full control over its signal."

Shopkick's shopBeacons already include a built-in whitelisting function that prevents "free rides" on top of its signal, Roeding said. This security layer is hard to build, but once it's done, the implementation is easily completed by using a software development kit.

The extra privacy protections afforded by Bluetooth's update should be helpful to merchants, said Rick Oglesby, a senior analyst and consultant at Double Diamond Payments Research.

"Consumers therefore simply need the ability to opt in and opt out of specific marketing communications as well as to configure when these communications are permissible," Oglesby said.

That won't make it harder for retailers, Oglesby said. "Giving retailers the ability to market to consumers in a way that meets the consumers' needs is an enabler of effective marketing," he said. "Bombarding people with messages that don't resonate or that are intrusive doesn't yield any positive benefit for anyone."