By Dale S. Laszig
DSL Direct LLC
Ask any payment pro what's on the product road map and chances are good you'll be hearing about a tablet. Much of our daily lives are already transacted on the small screen. It's inevitable that the POS would find its way to the smart device platform.
The POS has always mirrored lifestyle trends. Consider the early prototype devices that transmitted card payment data on analog phone lines, the prevailing communications protocol of that time. Developers leveraged the telecommunications infrastructure to create a new kind of machine-to-machine communication.
The earliest POS devices were phones; some even had handsets. Twenty years ago, they replaced humans who would call an authorizing host and recite cardholder data to get an approval or decline on a transaction. Gradually, over time, the process became automated.
Most of the innovation in payments over the last 20 years began with an assessment of current infrastructure. Innovators continue to find novel ways to use existing technology and constantly attempt to improve on performance.
Consider the current landscape. POS technology has evolved along with consumer preferences, from the PC to the smartphone to the tablet. In the hyper-connected world, the POS mimics trends in social media by incorporating data analytics, geo-location, quick response (QR) codes and near field communication into the mix.
The mobile world has changed the way we think about the POS. Ten years ago, there was a push to educate merchants about all things mobile and help them create what was then called a mobile strategy.
Today mobile payments are an integral part of the digital landscape, coexisting with other forms of communication and commerce. Look at all the ways payments have evolved from authorize and settlement only to real-time, interactive conversations.
Payment professionals are leading the migration to Europay/MasterCard/Visa (EMV), educating merchants on the enhanced security of chip technology. The dynamic data within an EMV transaction stream and the microprocessing chip that is unique to each payment card are expected to reduce fraud, based on prior performance in other parts of the world.
Dave Birch is a director at Consult Hyperion, a UK-based payment consulting firm. In his book, Tomorrow's Transactions-The 2014 Reader, Birch wrote, "The U.S. will undoubtedly see the same dynamic as the UK when it comes to the migration to chip: yes, fraud will go down but the fraudsters won't go away. They will switch from ATM and counterfeit fraud to online fraud."
We compare digital currencies the way that we used to discuss card brands; we're curious about their impact on the POS ecosystem. The conversation has become increasingly strident as traditional payment professionals attack what they perceive to be vulnerabilities in the alternative currency schemes.
In his book, BitCon: The Naked Truth About Bitcoin, Jeffrey Robinson described bitcoin as "a digital something" that pretends to be a currency and is played with like a commodity. The technology is brilliant but bitcoin is "a political movement that reeks of a delusional cult," he said.
Engineers and developers help payment professionals navigate an array of emerging solutions that are steeped in algorithms, data analytics and geo-location technologies. The POS is just one small part of the big picture, but it is one the industry is rapidly adopting.
Advanced data analytics technology is doing more than just facilitating real-time engagement among consumers, merchants and brands. It is also protecting cardholder data from malicious attacks.
In his August 2014 post in InformationWeek, Mike Urban, Director of Financial Crime Risk Management at Fiserv Inc., stressed the need for financial institutions to have real-time detection analytics.
"[Big] data has enabled banks to deploy real-time analytics on a massive scale to meet these growing threats," Urban wrote. "Financial fraudsters are becoming increasingly sophisticated and daring, raising the potential for serious disruption to the entire financial system."
The payment card is going the way of the telephone handset, soon to be replaced by a token, fingerprint, iris scan or QR code. The cash register, countertop terminal, and even the old-fashioned restaurant menu, are slowly being replaced by dynamic digital technologies that can be seamlessly managed with pinching and spreading gestures on a screen.
Devices are no longer the center of the always-on, always-connected world, where the consumer can easily navigate across multiple channels and technology platforms to engage in banking, commerce and social transactions. The POS is saying, "I got this. Bring your own device, and I'll see you in the cloud, or the gateway. I'll take your tokenized data and that will be our secret handshake."
CardWare International, established in 1975, is a leading merchant service provider of hardware, software, supply logistics and call center services. CardWare Chief Executive Officer Biff Matthews has overseen many changes in the organization in response to emerging technologies and trends in the payments industry.
"Today's electronic payment environment is no different from EDC's [electronic data capture's] early stages," Matthews said. "Compared to terminals, today's payment environment uses robust POS systems, tablets or smartphones."
Support services have evolved in response to emerging technologies, too. "While the phone remains a merchant's primary support source, support has expanded dramatically," Matthews noted. "Quality support today incorporates live chat, YouTube video and greater use of online resources. Merchants expect to receive support when they need it, and in whatever way that they want to receive it. Merchants expect instant solutions.
"Hardware continues to evolve at an accelerating pace. How long was the iPhone 4 on the market before being outdated? CardWare offers obsolescence and protection programs as a bundle."
In a September 2014 conference hosted by Consult Hyperion and NYPAY, and held at Google's New York City headquarters, Dave Birch said that few people in the 1980s could predict the ubiquity of mobile phones a mere generation later. Birch suggested it may be equally challenging to anticipate the dominant payment technologies of the next 20 years. With such an amazing history to build on, it could be the next leg of the POS journey will be the best yet.
Dale S. Laszig manages business development and strategic initiatives at DSL Direct LLC, a payment consulting company that helps clients promote, design, and deliver secure, leading-edge technology solutions. Her clients include software integrators, manufacturers, retailers, and value-added service providers. She can be reached at 973-930-0331 or firstname.lastname@example.org.
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