Several merchants in China are testing a new technology leveraging short-range light and a smartphone’s camera to securely enable tap-and-go loyalty program rewards.

The technology is called Light Field Communication and uses lighting-based software instead of NFC’s radio-based technology to verify a smartphone’s presence during a transaction. LFC readers from ByteLight are currently being rolled out to 100 retail locations in China for merchants such as Yummie House, Happy Lemon, Carrefour, Besyo and Golden Phoenix.

“Just put a LFC terminal on a POS, and you’re up and running,” said Dan Ryan, founder and CEO of ByteLight, Boston.

“We’ve designed our SaaS platform to support loyalty and rewards from the start,” he said. “In that sense, retailers are really paying for the services and platform on top of the readers and not the readers themselves.

“They can use it along with legacy NFC payment systems that don’t support iPhone or loyalty programs currently, with the potential to run all mobile payments through it as well in the future. Also, in places like China where there aren’t legacy systems already in place, LFC is a great way to get location-based loyalty and mobile commerce programs underway, without having to displace any existing technology.”

Proximity transactions
ByteLight’s patented LFC readers transmit a signal via short-range light, which is picked up by a shopper’s camera-equipped mobile device by touching the reader or moving within close proximity of it.

ByteLight has partnered with cloud-based retail platform Appconomy to pilot the program at merchants using Appconomy’s JinJin marketplace application. The joint solution enables participating retailers to redeem and reward customers checking into stores, engaging in loyalty programs and making purchases.

With LFC-based in-store transactions, users do not need to unlock their phone, launch an application or search for the store they are in.

When users check-in or out, they tap their phone on an LFC Reader. ByteLight then instantly verifies their location and credits them with loyalty points for future purchases.

The LFC readers plug into existing point-of-sale systems to securely verify a customer’s presence.

At the moment, LFC does not support payments, but the company is working on that.

NFC alternative
ByteLight is positioning LFC as a more cost-effective solution compared to NFC.

While many in the mobile industry expect NFC  to play a significant role in mobile transactions going forward, the technology has been slow to catch on. In part, this is because retailers have not invested in the necessary hardware to enable tap-and-go transactions in stores.

Additionally, there are still not that many NFC-enabled phones available to consumers.

In comparison, ByteLight says LFC readers are less expensive and work with any smartphone currently available.

“You have instances where retailers like Best Buy have spent tens of millions of dollars on NFC for their POS, and they can’t even run loyalty or redemption programs on it,” Mr. Ryan said.

“LFC works on any phone with a camera, and the hardware itself is one-twentieth the cost of NFC,” he said. “It works out of the box for redemption and loyalty programs, and we’re looking to add mobile payment functionality down the road.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York