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Table of Contents

Lead Story

Tablets, smart phones or the cloud for mobile payments?

News

Industry Update

Global Payments, payments community respond to reported breach

Gift card providers pull out of N.J.

Trade Association News

Features

Seven essential steps for creating a successful social media strategy

Marc Beauchamp
Performance Training Systems

Research Rundown

Mobile payment experts disagree on NFC dominance

ISOMetrics:
Durbin's impact on major banks

Selling Prepaid

Prepaid in brief

Demands of a standardized fee disclosure box

How consumer segmentation leads to success

Views

Has payment fraud become SOP?

Patti Murphy
ProScribes Inc.

ISOs and MLSs: How banking changes will affect you

Brandes Elitch
CrossCheck Inc.

Education

Street SmartsSM:
Lessons for a lifetime

Jeff Fortney
Clearent LLC

Moving mobile payments to the next level

Nicholas Cucci
Network Merchants Inc.

In search of an ethical corporate culture

Dale S. Laszig
Castles Technology Co. Ltd.

The challenge of data breach reporting

Mark Brady
CSR

What matters most in a restaurant POS system?

Jerry Cibley
The POS Man

Company Profile

Chargeback Guardian Inc.

New Products

Mobile check deposit

Simply Deposit Mobile
RDM Corp.

Bundling mobile payments

All Inclusive Mobile Merchant (AIMM)
CardWare International, Resource Leasing Co.

Inspiration

Community and the payment pro

Departments

10 Years ago in
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Forum

Resource Guide

Datebook

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The Green Sheet Online Edition

April 23, 2012  •  Issue 12:04:02

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Tablets, smart phones or the cloud for mobile payments?

Musing on the sizeable role Apple Inc. is playing in the evolution of mobile commerce, Meritus Payment Solutions Principal and co-founder Alan Kleinman said Apple's mobile device innovations centered on the desire by late Chief Executive Officer Steve Jobs to improve the delivery system of music to consumers. The payment functionality of the iPhone via the App Store and iTunes accounts was "just a byproduct of everything else," Kleinman said.

Some byproduct. The explosion in smart phone - and now tablet computer - usage by consumers is quickly being matched by merchants and sales professionals adopting the devices to reduce payment "friction" and increase revenues. A Retail Info Systems News survey revealed that nearly two thirds of national and large regional retailers will either test or deploy tablets in 2012. Remember, Jobs only introduced the first iPad to the U.S. market in the spring of 2010.

A main driver of this trend is that retailers are threatened by consumers armed with smart phones in-store, according to RIS News. With a few taps on smart phone touch screens, shoppers can compare prices on in-store merchandise with potentially better deals in cyberspace - and have more information at their disposal than the stores' own salespeople. "The only option is to use tablets to level the playing field," the report said.

A moveable feast

The general retail sector is only one new battleground for mobile POS supremacy. Another is food service, where tablets seem to be becoming the dominant device. One service provider gaining traction in this market is E la Carte. The Silicon Valley-based startup offers the Presto, a tablet that allows patrons to select and purchase from restaurant menus at the table.

Abtin Hamidi, Director of Sales at E la Carte, said the Presto was born a few years ago when the company founders, students at Massachusetts Institute of Technology, were sitting in a Boston restaurant and eager to get the check and hurry off to class. But the server wasn't around. Hamidi said, "That's where the thought came from: 'Why do we have to wait for the server? Why can't we just order when I'm ready and why can't I pay when I'm ready?'"

After two years of development time, the Presto was rolled out in 2011; the company now has locations live in California, Illinois, Massachusetts, New York and Florida. While the Presto is not a POS terminal in itself, it connects wirelessly to restaurant POS systems, Hamidi noted. As an extension of the POS, the Presto is offering restaurants impressive value.

Hamidi said the Presto is boosting check size by 10 percent, as tablets have proven to spur impulse buying, especially before meals, when people are hungry. "You're probably more prone to ordering desserts then, than when you're stuffed after your meal," Hamidi said.

The Presto has also speeded up table turn by several minutes, resulting in restaurants being able to serve more patrons. "And that's just the credit card processing time if you think about it," Hamidi said. "By the time I give you my credit card and you come back and I sign it, it takes about seven minutes."

Hamidi rattled off more benefits of the Presto. It increases loyalty program enrollment over ninefold. It offers detailed reporting of user behavior, which helps restaurateurs target customers, refine menus and personalize offerings. It splits checks and boosts tips, as well, which must come as a great joy to servers. The default tip setting on the Presto is 20 percent, which almost 90 percent of patrons choose, Hamidi said.

Hamidi stressed the Presto is not a replacement for servers, but a way to free them up from the tedium of order taking and bill processing. On busy nights, when servers are reduced to "survival mode," customer engagement suffers, Hamidi said. Not so with the Presto, he added, which allows servers time to engage customers in more meaningful ways and provide more personalized service.

Device diversity

Tablets are not ideal for every restaurant environment, however. Heather Mark, Senior Vice President of Market Strategy at ProPay Inc., sees high-end restaurants as a venue where smart phones could succeed. In such establishments, patrons expect a level of personal service a self-service setup could not deliver, but where a less obtrusive smart phone would make a better fit. That distinction just points out what excites Mark about the mobile POS space.

"There are so many different applications for each different incarnation," she said. "I'm less inclined to think that either the tablet or the smart phone will win out. I'm more inclined to think that they both will find their place in areas where it really makes sense to have a smart phone or a tablet."

The Orem, Utah-based ISO has been at the forefront of the mobile merchant sector. In 2008 it rolled out the MicroSecure Card Reader, now marketed as the ProPay Flash - a simple, pocket-sized, payment-only device designed for door-to-door salespeople and other independent sales forces.

Then, as smart phone adoption exploded, it launched the ProPay JAK - a dongle that plugs into the audio jack of smart phones. The devices fit different user profiles but offer the same main benefits - mobility and flexibility.

ProPay Vice President of Marketing Scott Nelson, said, "If you're in a convention hall with your smart phone and you can't get good cell coverage, you can operate both these devices in a suspended mode, swipe the card, capture the data, encrypt it, and then process [the transactions] when you do have access, either through your data plan, or you can connect the device to a PC and connect to the Internet."

Variety in-store

The choice of tablet or smart phone as the preferred mobile payment acceptance device rests on many factors. Small, independent contractors might prefer smart phones because of their lightweight portability and durability. Alternatively, large corporations might choose to outfit sales staffs with tablets for integrated enterprise resource planning (ERP) initiatives.

Meritus' Kleinman said ERP strategies employ tablets as more than just mobile POS terminals, using them as portable, mini offices that tie in lead generation, enterprisewide communication and sales, as well. "As it becomes more integrated, it creates so much more value to that company," he said.

Choosing one over the other may be a product of the number of variables of a particular business's products or services. A pool cleaner with relatively fixed prices is a prime candidate for a smart phone, according to Kleinman. On the other hand, if you're a clothing retailer, the tablet seems the way to go.

"When you're launching your clothing line for the season, you might have 50 different SKUs [stock keeping units], multiple different colors, multiple different sizes," Kleinman said. "And you're able to show it to [potential customers] immediately, as well as the rich images and the ability to create those visual effects. Before the tablet, they were never able to do that."

Another variable is processing volume. Kleinman puts the arbitrary cutoff point at $1,000 per month. A vendor processing under that number would likely not have the need for a tablet. "But if you're selling significant volume, that's where you're going to invest in the tablet and make sure that that application you provide enables you to really leverage technology to grow your business," Kleinman said.

Keep-in-touch connectivity

For some merchants, however, the difference between mobile POS solutions is negligible. That blurring of the benefits of one device over another is likely to increase over time, as the very idea of the retail POS environment changes into one that facilitates more fluid and dynamic communication between consumers and retailers.

In such a scenario, the mobile device itself is not as important as how it connects service providers with clients, according to Richard Crone of Crone Consulting LLC. Crone said that connection establishes five mobile trigger points - locating, check-in, in-store self-service, payment and post-confirmation promotion - with each trigger point corresponding to a different step in the sales process.

Crone laid out the five steps. The mobile device locates a customer who may be investigating a product on a smart phone. That customer then checks into a store by scanning a quick response (QR) code, for example, which offers an opportunity for the sales rep to interact with the customer mobilely or face-to-face.

The customer may then self-checkout and pay for a product with a mobile device, which leads to the final point, where the retailer follows up with the purchaser to reinforce the consumer experience and offer incentives for repeat business.

"At that point the sales cycle starts all over again," Crone said. "It's now circular rather than linear. It's now dynamic and continuous, rather than sequential, with a defined stop and start. It's now an infinite loop rather then a timed, perishable sequence."

Mobile on up

Crone believes the brick-and-mortar Apple Stores typify this new retail POS environment, where sales reps roam showrooms with either tablets or smart phones, and sometimes both. The mobility Apple reps display reflects the two things Apple Stores eliminate: checkout counters and the lines of customers that accompany them.

Thus, mobile POS devices "drive the effectiveness of the sales and merchandising process at the aisle level, not at the checkout level," Crone said.

Such environments eliminate one more thing: the need for customers to flash payment cards to make purchases. Crone noted that payments in Apple Stores are made simply by customers accessing their iTunes accounts by inputting user names and passwords.

ProPay offers a similar cloud service, called ProPay Link, through which consumers and retailers connect via ProPay's virtual network. Consumers download the ProPay Link app to mobile devices, which allows them access to a wireless communication channel with merchants setup with ProPay accounts.

Via the app, diners can reserve tables and pay for meals at their favorite eateries without having to take out plastic at the end of the meal, or they can accelerate the purchase of a particular shirt in a specific size at a local department store without having to schlep to the store, Mark said. And merchants can take advantage of ProPay Link's real-time communications and marketing capabilities to enrich and deepen connections with consumers.

"We really looked at building a business enablement tool for the merchant, more than just another payment acceptance channel," Mark said.

Mobilize now

Cloud services like ProPay Link could effectively eliminate the need for POS devices, whether they be standalone or mobile terminals. It is therefore safe to say that mobile POS acceptance devices could represent a transition to cloud accounts where mobile wallets, let alone physical ones, are unnecessary.

If that scenario represents the future, the time to investigate it is now, before merchants realize their standard card readers are obsolete and jump to mobile POS vendors. Kleinman puts it down to evolve or die. "If you haven't evolved, then you have diminishing assets," he said. "And what I mean by that is your merchant portfolio. You've got to continue to invest and change." Crone offered a homework assignment for ISOs and merchant level salespeople (MLSs): visit your local Apple Stores - and while you're at it, get a latte at your local Starbucks as well, he said, as both "best-in-class" retailers have grasped how to leverage and implement mobile technology.

Crone said sales reps should then take what they observed and turn to merchants in their own portfolios. "They should go back at every business they have and talk about a virtual point of sale inside their store, either using their own mobile phone when their reps go outside the store or using a tablet when they're in-store," he advised. "This is an opportunity for a new sale to their existing customers which, by the way, is the easiest sale to make."

Even mom-and-pop operations with one register apiece should not be overlooked. "You can power that store owner with the ability to process a transaction on a smart phone, give that same capability to do it on his tablet," Crone said. "And so as sales go through the roof that day, they can empower the sales representative on the floor to take sales, as well as a manager can take sales. ... If every MLS knew that they could sell one to two of these [mobile] units right now, they could double their sales, at least - what's that worth to them?"

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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