... shoppers should be cautious. The pricing at grocery stores and other retailers is not transparent enough to give consumers any real power or choice, he said, and “there’s a sense of fairness that’s derailed here.”The difference between frequent flier miles and personalized pricing is discounts are applied to a group in the frequent flier model, and access to that group is a transparent and open process. In the personalization scenario, a merchant can set any criteria as a determination of pricing, including gender, race, sexual preference, or employment history.
When this personalization trend is coupled with mobile computing, we can see how location data and the use of our mobile device to do everything from searching for a nearby restaurant to paying for our meal at that restaurant can be used to further develop our consumer profile. The other relevant article in the NY Times discusses the "Campaign to Digitize Your Wallet" and focuses on the partnership between Starbucks and Square, the mobile payment provider. Google wallet has a similar app, which essentially allows "near field communication" - your phone communicates with the cash register and approves the transfer of funds, reducing "friction" and making it easier to get the money out of your account into the merchant's.
The problem with mobile payments and personalized pricing, from a privacy perspective, is all of our purchases will be digital. The data and metadata related to the purchase will be added to our "consumer profile" sold, and resold to other merchants. This is a process that still lacks any transparency; there is no way for an individual consumer to have any control over the data that is collected about her in an electronic transaction. The only privacy protecting measure is to remove the battery from your phone before you walk into a store (so your location and identifying information can't be tracked using your mobile device) and to pay with cash (and don't give your zip code when they ask).
Protecting privacy will become exceptionally more difficult as mobile payments and personalized pricing become more prevalent.
Article first published as "Personalized" Prices and Electronic Wallets on Technorati.