By Dale S. Laszig
The payments industry bloomed when electronic transactions took hold and gained speed and complexity as the market matured. A vast improvement over manual credit card imprinters, nicknamed "knuckle busters," first-generation countertop terminals were purpose-built, single-use devices designed to manage payment processing. Their proprietary operating systems required specialized back-office tools for loading and updating software and for building and maintaining merchant processing accounts.
Second-generation integrated processing solutions were massive, expensive and proprietary. Restaurateurs and retailers used them to manage high volumes of transactions across multiple lanes and properties. These systems frequently required on-site installations and manual operating system updates and were out of reach for most small to midsize business owners.
Third generation, fixed and mobile POS tablets are remotely manageable, open-source devices that can be updated on the fly and are broadly compatible with a range of peripherals. These devices are emblematic of a new generation of merchants and consumers with fresh expectations about consumption, retailing and hospitality.
"What we're seeing is a complete change to the old legacy systems, appropriately driven by technology," said Norm Merritt, President and Chief Executive Officer at ShopKeep.com Inc., a tablet POS solutions provider based in New York City. "Uber upended taxis; Airbnb disrupted the hotel business; technology provides access to incredible new insights about business."
Merritt and other industry executives expect POS tablet adoption to increase exponentially due to the power, security, simplicity and versatility of the platform.
Lifestyles and workplace environments around the world have become more mobile and virtual. Lightweight, portable tablet POS solutions facilitate payment acceptance from anywhere. Many have capacitive screens that support signature capture and built-in or peripheral near field communication (NFC) readers that accept mobile wallet payment schemes.
Recruit Lifestyle Co., subsidiary of Recruit Holdings Co. Ltd., founded in 1968 and based in Tokyo, Japan, created AirREGI, an iOS tablet solution. Company technicians personally installed 200,000 of these tablet POS systems in stores and restaurants throughout Japan. Adoption has been growing in other regions, the company stated. It plans to pilot test a quick service restaurant solution in 2016 with select ISO partners in the United States.
"We know that we are not the only mPOS provider but our aim is to be a consolidated business solution," said Hidenori Omiya, Executive Manager at Recruit Lifestyle. "AirREGI has many other products in Japan such as waitlist management (AirWAIT), reservation management (AirRESERVE), and employee management that create an ecosystem of business solutions that we'll be offering small and midsize business owners in the United States."
As consumers increasingly rely on mobile devices to navigate the retail ecosystem, retailers are using advanced technology to create a seamless consumer experience across multiple channels. Consumers can initiate transactions online or in a store and complete them elsewhere, while retailers are able to maintain a consistent brand experience throughout the retail journey.
"Clover is incredibly easy to use, a key differentiator of the platform," said Peter Karpas, Senior Vice President and Global Head of SMB Products at First Data Corp., a global payment technology solutions company headquartered in Atlanta. "We have an open app market and all [merchants] have to do is launch the apps."
Karpas compared Clover POS station touch screens to the tiny screens and buttons on countertop terminals that can sometimes be daunting for merchants to operate. "When you do a refund on Clover, you launch the refund app," he said. "You can also make the buttons appear larger or smaller, according to personal preference."
Simplicity is an asset when training staff or using the tablet, even as a simple cash register, he added, noting that easy-to-use apps look and act the same on smartphones and Clover POS tablets, and app developers enjoy innovating on the platform. He cited apps that provide "this day in history" and personalized fortune cookie messages on the bottom of payment card receipts as examples. "Developers can create anything they dream of through our app market," he said.
United POS Solution Inc., doing business as UP Solution Inc., is an end-to-end POS hardware and software company based in Hackensack, N.J., and founded by Jay Yoon in 2007. It has a line of POS solutions designed for the retail and hospitality sectors. Solutions include UP TAB Restaurant; UP TAB Retail; UP TAB Salon; and UP TAB AiO (all in one) 10-inch tablet with docking station.
The company works closely with third-party developers and ISOs, including United Merchant Services Inc., an ISO Yoon founded in 1994. UMS launched its gift and loyalty program, FlexGift, in 2001 and a front-end processing gateway in 2007. "We designed our POS products from scratch in Korea," said Yoon, who serves as President and CEO of both UMS and UP Solution. "These devices are exceptionally thin compared to other POS hardware because all devices and components are manufactured in our facility."
The UP Solution product family is on display at the company's corporate headquarters and in retail showrooms in major metropolitan areas to give agents, merchants and consumers a chance to interact with the technology. "Come in, get comfortable, play with it; you're not going to break it," said Dawn Landini, Senior Marketing Manager at UP Solution. "The big opportunity is educating, not selling; we have a large network of partners with different levels of competencies."
Advanced data analytics and automated algorithms can help merchants understand buying habits, anticipate customer needs, and deploy relevant, targeted messages and offers. Stores equipped with beacon technology can detect proximate consumers using their apps and direct targeted promotions to individual connected devices.
Swirl, a mobile marketing technology company based in Boston, is focused on bringing mobile ads and offers to consumers in brick-and-mortar stores through Bluetooth Low Energy beacons. The company said its private, programmable ad exchange for beacon-powered mobile advertising enables consumer brands to deliver targeted messages and offers directly to shoppers.
Because consumers must opt in to receive these offers, advertisers can reach a premium target audience of shoppers who want to receive the content. "We counsel our retailers to only share information that would be relevant and valuable to customers on their shopping journey," said Rebecca Schuette, Director of Marketing at Swirl.
Retailers are creating uniquely digitized payment platforms that reflect their store identities and brands. Digital payment platforms are customizable and configurable, with modular add-ons that enable business owners to add features and bandwidth as they grow.
AnywhereCommerce, based in Montreal, is a global mobile commerce technology provider with a suite of hardware, software and gateway solutions. The company created MePOS, a modular tablet POS platform with a small footprint and uniquely brandable, removable outer panels designed to transform POS real estate in lanes and merchant countertops.
"We deliver a tightly knit, fully vertical stack of hardware, software, applications and MePOS branding," said Mitch Cobrin, AnywhereCommerce founder and Chief Catalyst. "As payment acceptance experts, we partner with third-party developers to create scalable platforms from self-service to pay-at-table."
Cobrin has seen retailers pay heavily for customized POS systems, which typically include printing setup charges, volume commitments and long wait times. He noted that in contrast, MePOS high-resolution super graphic panels are available in single quantity and can be quickly, affordably customized, giving retailers a valuable point of differentiation. Merchants use the panels for holiday-themed promotions and as paid advertising platforms. Some sports stadium vendors change MePOS banners at key intervals throughout a hockey or baseball game, he added.
Digital payment technology has democratized retail and hospitality environments, enabling small and midsize business owners to employ the same kind of intelligent, scalable payment systems used by the largest United States retailers.
"The iPad is an industrial strength device that can be used in kitchens and other settings," ShopKeep's Merritt said. "Merchants have real-time access to critical business data, including what was sold, when it was sold, who sold it, who bought it, cost and price. All of this data is digitized and stored in the cloud." ShopKeep merchants can also use a pocket app on mobile devices when they're away from the store to see what's going on in their businesses.
Many tablet POS providers offer a range of affordably priced models with simple base applications that support an array of features, functionality and third-party applications. Consistent, transparent pricing for merchants is another improvement over the secretive proposals and customized quotes typically associated with legacy integrated POS systems.
Open source architecture and cloud-based processing systems enable tablets to adapt to emerging payment schemes, evolving regulatory requirements and security mandates. Manufacturers and acquirers recognize the importance of providing merchants with open access to POS technology to help grow their businesses.
Mercury Payment Systems LLC, based in Durango, Colo., implemented a revenue-sharing program with independent software vendors. The company was acquired by Vantiv Inc. in 2014 as part of a series of strategic initiatives aimed at creating a best-in-class technology stack.
"We believe in enabling our partners to innovate, deliver and service businesses utilizing our platform to simplify, and scale, their offerings," said Matt Downs, Senior Vice President of Integrated Payments at Vantiv. "We favor open market competition and open ecosystems because it promotes improvement for small and medium-sized businesses."
Downs cited three tenets that differentiate Vantiv from other technology-centric payment providers. "First, our service leadership delivers more than just residual sharing; second, we provide ISVs and VARs with a technology work bench, data analytics and service experience that helps them stay relevant," he said. "And third, we align ourselves around our partners to serve their customers in the very best way, staying highly focused on meeting partner needs."
Chris Williams, Vantiv Senior Vice President and General Manager of Independent Sales Partner Business, added, "Matt and I previously worked together at First Data, where we got to know the partner concept on both sides of the fence. We've seen many technically oriented ISOs cross over into specific verticals, away from the cookie cutter approach. Our ISO-friendly underwriting, relationship support and enhanced reporting has helped this channel flourish."
Many of the newer POS tablet platforms are comprehensive business management systems that enable merchants to track inventory, create invoices and run highly intelligent customer relationship management programs in addition to processing payment card transactions. Many of these systems have modular designs that enable merchants to add features as they grow.
"I started Jory with the intention of creating a business management system and true integrated solution that merchants can use to engage, transact and operate their businesses from a mobile, ecommerce, mail order telephone order (MO/TO) and omnichannel perspective," said Michael Hass, CEO at Jory LLC. "We designed a centralized hub that binds together the operational elements that small and midsize merchants need to manage customer, vendor and employee relationships and transact in any way they choose."
Hass saw a need for a full-featured mPOS solution in his previous role as an industry acquirer, where he became frustrated by poor support and a general lack of software features and revenue-sharing programs in the space. Many mPOS providers were not able to support Hass or his clients, so he resolved to fill the gap.
"I decided to close the doors on acquiring and started Jory, an ISO-neutral, processor-agnostic ISV with a deep background in payments," he said. "We support ISOs and protect their processing; we also recognize that merchants will have hardware in place, so we have a growing library of hardware we support."
In addition to its broadly appealing base product with thousands of SKUs, Jory specializes in select vertical markets, creating niche products such as a club management system for wineries.
Jory supports loyalty, discounting, and back office operations with features that can be turned on or off, to create a complete business ecosystem that's "as big or small as you want it to be," Hass noted.
The Oct. 1, 2015 Europay, MasterCard and Visa (EMV) liability shift is prompting many U.S. retailers to weigh the expense of updating legacy hardware against upgrading to advanced tablet processing systems. Many POS tablets have built-in tools to manage Payment Card Industry Data Security Standard compliance. Tablets paired with select card readers can help merchants maintain the highest standards of tokenization and point-to-point encryption.
"We've long felt that tablet POS was inevitable but tablets weren't really on our clients' radar until EMV," Cobrin said. "The EMV liability shift provoked retailers to think about how they wanted to address their entire POS environment; many began to think about replacing heavy iron legacy systems with more fluid technology platforms that support feature-rich content and solutions."
The NFC Forum, a nonprofit association established in 2004, published a report titled U.S. Retailers: Why You're Not as Ready as You Think for Today's Retail Payments Migration. Co-authors Matthew Bright and Frank Tekampe urge retailers to upgrade to EMV-compliant processing systems, particularly those that support NFC technology used by mobile wallet schemes such as Apple Pay, Android Pay and Samsung Pay. More consumers are using smartphones at the POS, they stated.
"I expect to see people with phones zipping through checkout in the not-too-distant future," Bright said. "Historically speaking, I see two separate threads: moving away from mag stripe, and moving toward contactless as a way to make fast, convenient, chip and PIN or chip and signature purchases."
Harbortouch Payments LLC, a national supplier of POS systems based in Allentown, Pa., introduced the payments industry's first free terminal and integrated POS programs. Jared Isaacman, the company's founder and CEO, saw limitless potential in computing platforms and resolved to focus on that market.
"There are a million different ways to customize these platforms; merchants can incorporate data analytics, tableside ordering and value-added applications to the ecosystem," he said. "There's so much runway in the computer world that it's easy to add new things."
The company provides an agent training and certification program that includes online orientation followed by onsite courses at its 9,000 square foot facility in Allentown. Harbortouch University courses are free of charge. Brian Jones, Harbortouch Executive Vice President of Sales and Marketing said, "The goal is to arm our sales partners with the knowledge they need to succeed in this evolving industry."
Harbortouch surveyed 5,000 consumers on EMV chip card usage. Respondents complained about wait times; 44 percent were receptive to purchasing goods while in line instead of checking out at the POS. Isaacman said mobile, tablet-based, "line-busting" solutions can help retailers cut back on wait times and long lines. He further noted that the U.S. is still in a nascent stage of EMV adoption and urged merchant level salespeople (MLSs), ISOs and merchants to stay the course.
MLSs are once again at the forefront of a POS revolution, educating merchants and helping them make informed choices on a range of hardware, software, operating systems and third-party apps.
"At their core, POS tablets are unlike legacy solutions like an XP box or electronic cash register, that were built on closed architecture and provided few business insights," Merritt said. "It's difficult to integrate new features into that infrastructure." Additionally, POS tablets are generally more secure than older systems, many of which have unlocked USB ports and card readers that use nonencrypted, clear text, which are vulnerabilities cybercriminals can readily exploit.
Merritt also said that many independent merchants go into business because they are good at something. They follow their dreams and think about creating wealth for their families. Soon after establishing their businesses, they learn that no one is looking out for them. "As merchant advocates, we provide a valuable product that helps them compete and win," Merritt said. "And they don't need an engineering degree to run a report or capture transactions."
"There's a revolution that's happening in POS and the power of the new platform is that you have to have it," Karpas said. "Having a payment terminal is a business requirement. Why not take that device and enable it to do all sorts of other things to save merchants money and help them grow their businesses?" 
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