The Green Sheet Online Edition

January 23, 2023 • Issue 23:01:02

The Very Point of Sale
Are your merchants plugged in?

By Dale S. Laszig
DSL Direct LLC

After years of trying to humanize payment technology, the tables have turned. We're now wondering why we can't be more like our tech. How did this happen? For years, identical devices rolled off assembly lines to be palletized and shipped to warehouse loading docks, where they were promptly unpacked and daisy-chained to receive identical software loads. Countertop terminals looked and acted the same; programming options were scarce but POS devices, in tan, charcoal gray and black, were ubiquitous.

In the old days, the first question every help desk representative asked was, "Is it plugged in?" Thirty years later, merchants are asking themselves the same question, namely, are they plugged in to digital commerce, and if not, what's holding them back from upgrading? The answer could be simple or complex, depending on where they sit in the commerce value chain.

For a big-box retailer, an upgrade might mean optimizing the omnichannel customer journey. For a small store, it might mean adding channels, payment methods or contactless capabilities.

A recent study by FreedomPay offers merchants of all types and sizes a prescriptive road map. Unleash the Power of Pay, published in October 2022, examined technology's role in retail with Accenture, Deloitte, McKinsey and other leading market research firms. Researchers agreed retailers need advanced technology to compete in today's complex, consumer-driven market.

Market impacts

Participating researchers in the FreedomPay study applied a PESTEL analysis to identify political, economic, social, technological, environmental and legal impacts on the retail landscape. They concluded retailers face numerous pressures. Following is a sampling of research findings:

• Political: Deloitte researchers noted the war in Ukraine has caused supply chain shortages, particularly in the Eurozone, where Russia is halting gas supplies. "Supply chains are disrupted and there have been significant price hikes for fuel, gas, food, and electricity," they wrote.
• Economic: Accenture researchers found that retailers can combat rising prices and reduce spending by creating targeted, data-driven campaigns to win back customers. "The value of consumer data is tied to use in personalizing experiences and influencing users to build brand relationships and make purchases," they stated.
• Social: Accenture researchers additionally noted that 64 percent of customers want merchants to react more quickly to their changing needs and preferences, but 88 percent of retail respondents believe customers are evolving faster than they can update legacy systems. "Using data to effectively segment customers and understand their [needs] boosts satisfaction and brand reputation to improve interactions and produce long-term ROI," they wrote.
• Technological: McKinsey researchers reported that consumers have more checkout options than ever before. McKinsey's 2021 Digital Payments Consumer Survey found 82 percent of Americans used some form of digital payment in 2021. "Across developed economies, contactless payments for lower value transactions are ubiquitous," they wrote.
• Environmental: Edelman researchers conducting the Edelman Trust Barometer Survey found 52 percent of respondents wanted businesses to ramp up climate change efforts, with 49 percent calling for more efforts toward reducing economic inequality. "Data insights can help companies reduce [waste and related costs] by anticipating customer habits and requirements when ordering stock and hiring staff," they wrote.
• Legal: The International Compliance Association estimated fraudulent financial crimes account for 3.6 percent of global GDP. FreedomPay researchers recommended investing in secure payment technologies and partnering with integrated payment solution providers to help prevent data breaches amid rising cyber threats, such as hacking and malware.

Always-on managed services

As most payment professionals would agree, merchants are not big fans of change, but updating a legacy system in the digital-first world is not nearly as daunting as it used to be. Yesterday's purpose-built POS systems frequently required heavy upfront investment in terms of equipment, training and maintenance fees. And limited shelf lives were overshadowed by threats of noncompliance and obsolescence.

Today's payment solutions, by contrast, are designed to seamlessly adapt to ever-changing requirements, global consumer preferences and payment methods. Managed services include remote monitoring and continuous upgrades to keep technology secure and up to date. In addition, integrations are a snap because most modern systems are built on open source, processor-agnostic architecture.

"Cross-border commerce can be complex, from navigating regional data protection regulations to integrating with local payment providers and offering innovative payment methods," FreedomPay researchers wrote. "Merchants have the power to streamline this process with an agnostic, scalable, open-loop solution that integrates with any banks, payment providers, and Points of Sale."

Hyper-personalization

The static nature of legacy systems was arguably their greatest design flaw. Absent from dynamic political, economic, social, technological, environmental and legal forces, these rugged old machines might have gone on processing payments forever. But we've evolved considerably since the 1990s. In our quest to make technology look and feel more like us, we've taken payments to what FreedomPay calls Next Level Commerce. This hyper-connected, hyper-personalized world offers new ways for humans, machines and brands to connect and transact.

Paul Snelling, director, platform solutions at FreedomPay, urged merchants to tailor products and services to each customer in a June 13, 2022, blog post titled, "Power of Personalization – Next Level Commerce."

"To reach that 'Next Level', businesses must be prepared to adopt and adapt to a rapidly evolving commerce landscape in which you don't see customers as a whole entity but very much an individual in his or her own right," he wrote. "The individual customer has become a target which is fickle and fast-moving. And so today, merchants must focus on driving more of an experience for customers, thus beginning data-driven conversations."

Cost of doing nothing

Acknowledging rising costs' and inflation's impact on merchants, FreedomPay maintains investing in technology, even during an economic downturn, is paramount for attracting customers and growing a business. "The short-term financial commitment to updating legacy systems can increase merchants' medium to long term ROI by allowing merchants to compete effectively and grow customer loyalty through personalization and convenience," they wrote.

These issues were further explored in a panel I moderated at NRF 2023, with payments industry leaders Chris Kronenthal, president of FreedomPay; Belinda Harris, vice president, retail development for Spectrum Stores; Ben Love, CEO, North America at Castles Technology; and Craig Witsoe, CEO for Elo. Our roundtable was live-streamed from FreedomPay's booth on LinkedIn, Twitter and YouTube and is available on demand.

Dale S. Laszig, senior staff writer at The Green Sheet and managing director at DSL Direct LLC, is a payments industry journalist and content strategist. Connect via email dale@dsldirectllc.com, LinkedIn www.linkedin.com/in/dalelaszig/ and Twitter https://twitter.com/DSLdirect.

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