The Green Sheet Online Edition
February 27, 2017 • Issue 17:02:02
The very point of sale:
The adjacent POS-sible
When scientist Stuart Kauffman introduced the adjacent possible theory in 2002, he theorized that good ideas inspire better ideas and that innovation is a self-perpetuating process of small steps that lead to big discoveries. He also said leapfrogging over basic steps may cause inventions to miss the mark. Many merchant level salespeople (MLSs) know all about leapfrogging.
Some MLSs recall working with dial-up Internet terminals; others remember wireless devices deployed with giant batteries and routers. These devices were ahead of their time, introduced before supporting infrastructures were ready.
One door leads to another
In his 2011 book, Where Good Ideas Come From, Steven Johnson also explored the adjacent possible. "Think of it as a house that magically expands with each door you open," he wrote. "You begin in a room with four doors, each leading to a new room that you haven't visited yet. Once you open one of those doors and stroll into that room, three new doors appear, each leading to a brand-new room that you couldn't have reached from your original starting point."
In our industry's haste to bring new products to market, it's easy to overlook a few doors. What if we had opened the broadband door before introducing IP-enabled terminals or opened the expanded cellular coverage door before introducing wireless terminals? Broadband-connected terminals synch in seconds without the screech of harmonizing dial modems. Mobile payment devices readily deploy without teams of technicians and rolling carts of equipment.
Yet there is something courageous and even magical about going into the wild and doing something that has never been done. Failure can be a great teacher. MLSs frequently face the unknown when they solve problems in the course of selling and installing processing solutions.
Manual back-up saves the day
Unlocking every facet of a merchant app or pre-installation checklist can be daunting for any salesperson. Mobile and cloud-based solutions may be easy to deploy, but successful activations require clear objectives and open lines of communication among merchants, processor client services and field personnel.
"Twenty years ago, seasonal merchants used mobile terminals powered by car batteries and manual imprinters at peak processing times," said Ferne Glemby, President of CardPlus Empower LLC. She said she felt like she was back in the 1990s when she recently showed a merchant in a theater lobby how to use a knuckle-buster. Glemby's merchant needed a mobile solution to process ticket sales during high-traffic ballet theater season. She proposed three alternative scenarios:
- Option 1 ‒ Tablet and EMV reader: Pair portable chip card readers with iPads. The merchant declined, citing lack of Wi-Fi and cellular connectivity and extended wait times for processing EMV (Europay, Mastercard and Visa) transactions.
- Option 2 ‒ Countertop terminal with store-and-forward: Borrow a credit card terminal from the back office; process sales in store-and-forward mode. The processor confirmed this form of processing would be acceptable due to the merchant's stellar history and willingness to take full liability and risk for any chargebacks. The merchant was also pleased until a routine test revealed the processor no longer supported the store-and-forward feature.
- Option 3 ‒ Manual imprinter: Overnight a knuckle-buster and paper receipts to the merchant. This is the option ultimately used, and charges were manually entered during the shows.
This is an example of what can happen when a help desk approves vaporware (a product that was never manufactured or was officially cancelled) or a power failure disrupts the electrical grid. "Communication failures between processors and agents or devices and networks can put our always-on, always-connected merchants back on paper receipts," Glemby said.
Adjacent infrastructure is available
Todd Lawrence is Chief Executive Officer of Just Cash, which offers a mobile app of the same name designed to replace plastic cards at ATMs and bring the last critical mile of the banking experience into the mobile world. Using a mobile app at ATMs is safe, secure and simple, and makes card fraud, and lost or stolen cards a thing of the past, Lawrence stated.
"Consumers sign into the app, select an ATM to visit, enter the amount they want to withdraw and approve any convenience fees," he said. "When they arrive at the ATM, they simply select 'Mobile Cash,' enter a one-time Just Cash code and receive their funds."
Lawrence described the events leading to his company's North American launch as "a series of smart decisions that put us on a path that allowed us to scale the company efficiently." The fintech startup needed a solid foundation with the right partners, team members and readily available specialists with expertise in digital currency, hardware and software, he added.
Reflecting on his incremental progress from fintech startup to provider of an innovative mobile cash app, Lawrence said he began with the simple premise of leveraging existing ATM real estate. He saw ATMs as an integral part of the payment and banking value chain: trusted, ubiquitous and ripe for disruption. He set out to create a solution that enhances existing ATMs, bringing convenience to consumers and incremental revenue to small and midsize merchants and ATM owners, deployers and ISOs.
Technology changes so fast that it's easy to overlook the iterative process that has brought the payments industry to this analog and digital intersection, Lawrence noted. He views every solution as both an iteration of an existing idea and a key that can unlock another door.
'Co-opetition' is good
How many payments industry stakeholders does it take to change a POS system? The answer may be hundreds or even millions if you consider the many interlinking stakeholders in the payments value chain. Ours is a collaborative business, a long tail of large and small players whose combined efforts move the industry forward in billions of tiny increments.
Payment card brands, third-party service providers and merchant acquirers work with direct competitors to enhance payment security, risk management and POS technology. Their efforts are reflected in numerous coalitions, associations and initiatives, including EMV, the Payment Card Industry Data Security Standard and the Electronic Transactions Association.
Jeffrey Bower, founder and Principal of Bower & Partners, encourages banks, microfinance organizations, fintechs and telcos to continue this spirit of "co-opetition." In an interview with organizers of the upcoming PayExpo Americas 2017, Bower said co-opetition will enhance, not stifle, competition. "With a shared set of rules, an interoperable platform and a common brand – these actors can together create the fundamental framework to enable the opportunity to develop a level playing field to compete on digital payments," he added.
Dale S. Laszig, Staff Writer at The Green Sheet and Managing Director at DSL Direct LLC, is a payments industry journalist and content provider. She can be reached at firstname.lastname@example.org and on Twitter at @DSLdirect.
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