Bluetooth beacons, which can transmit offers to a nearby customer's smartphone and payment data to a merchant, have huge potential. But to get the most out of beacons, merchants have to place several of them throughout their stores, increasing the overall cost of deploying what is still a very new technology.

Estimote, a big name in the beacon space, offers a package of three beacons for $99.  Roximity, another beacon manufacturer, sells beacons for $50 each, a bundle of three for $100, and lowers its price in further increments for bulk purchases.  These have a five year battery life; Roximity also sells short-term beacons, which last six to 12 months, for $10.

Beacons rely on Bluetooth Low Energy (BLE) signals, which have a longer range than the Near Field Communication technology used in some mobile wallets and can be more narrowly targeted than cloud-based systems that use a phone's GPS to locate the customer. 

Roximity recommends that merchants place multiple beacons throughout their stores. For example, a grocery store or a clothing store might want a beacon in every department, sending different messages to consumers as they shop.For an individual store a bundle of three beacons might be enough, but for a national chain the scope of a beacon project could get much bigger, said Jordan McKee, a senior analyst covering mobile payments at 451 Research Mobility Team.

"Retailers are still testing the waters right now," McKee said.  They will probably not "spend thousands or millions of dollars into a full deployment since there isn't much consumer education yet," he said.

Big companies like PayPal and Apple are proponents of beacon technology, but their efforts are still in the early stages. PayPal's Beacon is not yet generally available and it has not made its cost public; Apple does not offer iBeacon hardware, but is reportedly developing a device that could work in its own retail stores or in the home.

Roximity, which also charges a monthly fee of up to a penny per customer based on how many users install a merchant's Beacon-enabled app, says the technology pays off in the behavioral data it provides on shoppers.

"In almost every scenario it's instant ROI (return on investment)," said Danny Newman, co-founder and CEO of Roximity, which offers beacon hardware and a location data platform for merchants.

"For less than a couple hundred bucks per location you're getting immediate actionable insight into consumer behavior," and this data can be used to push offers and rewards to shoppers, he said.  "For every proof of concept scenario, there are various obvious upticks in both sales or … average ticket size."

In the previous basketball season, Roximity provided beacons to the Barclays Center to use with the Brooklyn Nets app, which will continue to use the vendor's technology this season, said Newman. Roximity is also working with three large national retailers, which will be going live soon, he said.

Store placement is a key issue with beacons, said McKee. Because beacons are roughly the size of nightlights, they can be easily pulled off the wall, so merchants need to think about keeping them out of reach but also close enough to detect shoppers' smartphones.

ByteLight might have a solution to the placement problem though, baking its location-based technology into energy-efficient light fixtures. The Boston-based company partnered with General Electric in May to embed beacons in GE's LED Luminaire-IS series lights.

But placement might not be the only issue holding beacon technology back at retailers. To receive offers, consumers must be running a merchant's app, since beacons do not yet push notifications directly through an Apple iOS or Google Android device's operating system, said Trevor Filter, head of product at Slide, a New York-based payments startup operating in beta.

"If you're going to ask a customer to download an unfamiliar app when they walk into your store, they're likely not going to do it and won't engage with your platform like beacons allow them to do," Filter said.

But if beacon technology does take off, the cost of each device will likely drop as a result, he said.

The mobile commerce vendor DoubleBeam recently partnered with SK Planet Inc., which developed the beacon-based Slyde mobile shopping app (which is unrelated to the startup Slide). Slyde is being integrated into DoubleBeam's Gopago mobile point of sale system, bringing up a user profile when a customer enters the store running the Slyde app. The customer can then pay without using cash or swiping a card.

PayPal has a similar system that uses a phone's built-in location technology to let consumers check in to pay when they visit a store. This system does not require beacons. A similar technology from Square, called Square Wallet, was discontinued in May because it did not resonate with consumers. 

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