A shopper in a department store decides to buy an expensive handbag. But when she hands her credit card to a sales associate to swipe, the shopper’s bank detects the purchase is for a suspiciously high amount. The shopper’s mobile service provider immediately initiates a request to verify the card user’s mobile location. This information is in turn shared with the card company’s fraud engine and the transaction is cleared to be processed -- all without ever inconveniencing the shopper.
This scenario is just one example of how location-based services can help consumers -- in this case, by balancing fraud protection with convenience. When consumers don’t have to endure the embarrassment and annoyance of having their card unnecessarily declined, merchants benefit because sales aren't lost, and sales associates don’t have to go through the stress of dealing with an irate customer.
Just as important, these kinds of location-based services operate behind the scenes. Aside from the initial confirmation when end users agree to opt in to sharing their location, they have no further interaction with the platform and are largely unaware of how, or even when, these services are determining their location.
Although a variety of location-based services have been available for nearly a decade, widespread use has only recently started to take off, due to the popularity of GPS enabled smartphone apps. An emerging alternative process known as the “network-based method” promises to gain even faster adoption because it enables financial institutions, merchants and other businesses to support a larger base of customers. And with mobile penetration at 100 percent in the US and many other developed countries, this approach essentially extends to every consumer, including those on non-smart devices.
According to Informa, an increasing number of devices other than smartphones will be used for mobile connectivity, such as tablets, laptops and feature phones, over the next three years. With the exception of tablets, this group of mobile devices does not have GPS capabilities. The same Informa data illustrates that although smartphones will rise to 69 percent of all mobile connections by 2016, a significant portion of mobile connections will not have the capability to access location-based services through GPS. Network location-based services and text messaging, which are compatible with nearly any mobile device, equates to a huge opportunity for brands to connect with end users, regardless of their device.
Five Major Advantages
The network-based method offers several advantages over the GPS app method:
- Ease of Use -- To access GPS location-based services, users must have a basic knowledge of how to operate a smartphone or tablet. They must download and set up an app, and they must keep the app current. In contrast, network location-based services require minimal user engagement to set up and activate. The network method locates a mobile device by identifying the cellular towers connected to the device.
- Reach -- The GPS method has limited penetration inside buildings or any locations where skyscrapers and other tall structures may block a satellite signal. Conversely, the network method offers coverage inside buildings like shopping malls and locations near tall structures such as downtown shopping districts.
- Timeliness -- The GPS method is not ideal for many location-based services because of the difficulty of establishing location in real time. Even in ideal conditions, there is latency in achieving a location fix with GPS. The network method relies on mobile networks to be aware of each device’s location in real time.
- Power Consumption -- When used frequently, GPS can drain the battery of mobile devices. This can lead to customer dissatisfaction and reduced uptake of those services. The network method simply leverages the duties the network already performs, so they don’t require additional battery consumption.
- Security -- Mobile devices and applications can be hacked or spoofed, causing them to relay inaccurate location. Using a cellular network minimizes this because the location comes from the secure radio base stations in the network rather than the device or application.
As a result of these mobile usage trends and technology advantages, it’s extremely likely that location-based services will expand from retail interactions and credit card holder location verifications to even more use cases that enhance customer relationships.
For example, tourists could receive real time directions and transportation options when they enter certain geographic areas. Meanwhile, sports spectators could receive alerts about scores and in-game events when their devices are detected at stadiums. Many more applications of location awareness could also be developed as consumers and businesses gain experience and familiarity with the technology and its benefits.
Location-based services have emerged as one of today's compelling mobile opportunities. Combined with real time intelligence into end-user habits and preferences, brands can gain effective practices for using the network method to ensure high quality experiences for the end user.