As smartphones become smarter, location-based services and marketing is set to become the next big thing. This is developing industry, with countless entrants. Still, Foursquare, Gowalla, Facebook and Google appear to be the early leaders.
Google is currently testing its Hotpot service in Portland (http://mashable.com/2010/12/09/google-hotpot-ads/). Through this technology, customers will be able to receive marketing material and offers from the merchant as well as read reviews.
These marketing messages could be an opportunity for Google to leverage its Checkout service to disintermediate payments companies in the ‘bricks & mortar’ world. One could also see Paypal entering this area by striking up a partnership any of the other players.
Furthermore, we already see location-based services entering the rewards space. Foursquare recently launched a partnership with Safeway and PepsiCo. These partnerships will give brands access to check-in data on Foursquare and can push relevant offers based on your actions. For example, a check-in at a gym could trigger PepsiCo to offer the customer an energy drink.
Location based services clearly demonstrate how mobile payments pose a threat to traditional payments companies and could potentially have them relegated to commodity status.
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