By Mike Camerling
The payment terminal has been the be-all, end-all of small merchant POS transactions for many years. Many still use it as a single-purpose payment-acceptance device. But times are changing, and it's time to get out of the POS business and focus on the point of interaction (POI), with payments being just one of multiple applications merchants can use to make their businesses more profitable and consumer friendly.
Interaction at the merchant countertop today should encompass much more than payment. Consumers are far ahead of most small and midsize merchants in adoption of technology, using smartphones to access online ordering, social media, online reviews and recommendations, loyalty programs, and marketing pitches.
Your typical merchant is likely using the smartphone in idle moments for business apps, phone calls, messaging, social media, news and a host of other functions. The payment terminal, however, often sits unused until the merchant has to ring up transactions, many of which are low value and eating into profits as various card processing fees compress already low margins.
Is it any surprise that many smaller merchants still use terminals that are five, 10 or even 15 years old? They simply don't see value in upgrading to newer technology, even as many larger retailers have converted to more secure chip card acceptance systems.
Older devices have been quite reliable. Many merchants keep them running until they break down, or until payment industry requirements for updated security and processing standards make them obsolete, unless somebody can sell them on a replacement that truly adds tangible value and can be shown to make their businesses more profitable, more productive, and more in touch with customers' needs and expectations.
Terminal vendors are prone to tout technology advances when they refresh their product lines. But, really, does the typical small merchant give a hoot about how much more RAM can be crammed in, or how much MHz the latest ARM RISC processor runs at? Not likely. Their primary concerns are probably how much is it going to cost them, and what they will get out of it.
You won't be able to sell these merchants on a new system simply because it can run one or two applications beyond the core payment functionality. There is no Wow! factor in being able to accept EMV chip transactions when every credit and debit card still has a magnetic strip that can easily be swiped.
About the only winning argument to upgrade to a more modern payment terminal is to try and convince them there are no upfront costs and their monthly and per-transaction costs will go down—not exactly a compelling business model for any ISO or merchant level salesperson.
The industry is shifting direction to a model of feature-rich, payments-integrated business apps and services. Merchants need to interact with customers in multiple ways such as online ordering, loyalty management, marketing promotions, bill payment, and perhaps even ecommerce integration. Merchants also would like to derive more business value from countertop devices by using them to manage multiple facets of their businesses, such as gift cards, timesheets, inventory management, integration with accounting software, and daily reports on sales.
Today, if there's a critical business need there is an app—or several—to accomplish it. That's where you can apply your expertise and salesmanship to fully participate in the digital transformation of payments. With your on-the-ground knowledge and face-to-face contact with merchants, you can leverage tailored suites of applications that are most pertinent to your customers' needs, whether they're in general retail or a vertical such as hospitality or hair salons.
Let's say your expertise is in the area of hospitality. Previously, two or three terminal types might have covered the whole market. Now you have the ability to segment and expand your market with more granular options, such as providing mobile devices for taxi drivers, small portables for table service, tablets that empower consumer interaction, along with more traditional countertop and PIN devices.
In the past, payment was the first—and for many the only—app on the terminal; value-added applications were severely limited by hardware constraints vendors enforced to make it easier to complete rigorous certification requirements imposed by processors and acquirers. Now, the apps and the interaction count, not hardware.
To maximize value, apps should be able to run on many devices, not just one vendor's limited product suite. The industry is migrating to open environments based on the Android operating system. That expanded market appeals to more app developers, who will create more apps that will help you win over more merchants. That's truly a virtuous cycle we can create by putting payment in its rightful place—at the POI.
Mike Camerling is an advocate for choice and freedom in payments, a passion he injects into AEVI as CEO. He has over 15 years' experience managing companies providing technology to every type of retailer and merchant solution provider. He established the fundamental principles of openness and collaboration that are central at AEVI, and his passion continues to inspire his team and drive the company's mission forward every day. Contact him at + 49 5251 693 3630 or at firstname.lastname@example.org.
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