Enabling Technologies

How does a POS solution provider decide about its future roadmap – Integrate Alternative Payments?

MEDICI

Constant connectivity, contextual relevance, and a multi-screen world of consumers are changing offline shopping at restaurants, shops and merchants. From Banks, to carriers (T-Mobile Money, ISIS), Technology players (Google Wallet, iBeacons) and others are putting their efforts and resources behind solving the Payment Acceptance at POS. Point of sales (POS) system is getting disrupted. Card and Payment landscape, especially the retail payments, has undergone a sea change in the last couple of years and would continue to do so in the years to come. These changes are driven by changing consumer habits (mobility) and how they buy goods and services, redeem offers and interact with the sales professionals. Cloud, Analytics, Mobility and software together are enabling this change.

As consumer use of internet, and mobile devices for payments continues to increase, adoption of mobile-ready, effortless and perhaps contactless POS by merchants is expected to grow. Square, tablet-based POS systems and other mobile POS solutions are beginning to gather critical mass as well. Merchants, Resellers and POS solution providers therefore have shown keen interest to adopt alternative payments technologies especially mobile/digital payments.

Additionally, merchants have shown high dependence on their POS providers / Resellers (Hardware and software) to implement a scalable and cost-effective solution for them as most of the players lack scale. 80% of the POS terminals in the U.S. are amongst merchants who own less than 5-10 stores. These small merchants (e.g., restaurants) also lack technology expertise and long term strategy. Additionally, it is expected that more than 70% of the US POS terminals would be replaced in the next three years. While this provides huge opportunity for POS hardware and software players (and Re-sellers), it comes with a lot of issues and questions for both merchants as well as POS solution providers.

Current POS hardware and software players have to identify answers for the following key questions:

  • Which technology/solution should the POS players focus on, given the fact that there are more than 9 enabling technologies including NFC, QR codes, Beacons, etc. available in the market?
  • Should the POS players focus on developing the entire eco-system including their own wallet, or should they focus on developing the app only, that talks to the existing POS?
  • Too many payment alternatives are available for the vendors today: Players like Visa and MasterCard are pushing for EMV adoption and are working on contactless payment, which is being projected as the next logical thing post adoption of EMV, while there are also the options such as card readers, mobile wallets and apps. So, if one of these alternatives is adopted, would it get antiquated in a few years?
  • Is there one technology that meets the varied payments requirements of all merchants, and if not, which one of the existing or upcoming technologies comes closest to being the one-stop solution for all such requirements?

Currently, POS Hardware and software vendors are working on identifying the appropriate technology/solution for them which should be scalable at the same time future proof. Some players are trying to implement multi-channel alternative payment methods as selecting one is tough. Others are just taking a bet on one or the other. Although this approach may help vendors in short term, it comes with the risk of creating confusion and indecision in the minds of the end customers and merchants, which may act as an inhibitor to growth for POS payments in the years to come.

To overcome this problem and to help companies devise a clear road map for future technology adoption, there is a need to come up with a framework for evaluating various options under three important axis.

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The analysis has three dimensions namely POS players from Supply Side (Software and Hardware), Merchants from Demand Side (Customer Touch Points) and Technology options (Ex. NFC, QR Code, RFID etc.). The output of the mapping would assist a POS player identify the right technology/business solution to adapt and would also provide a roadmap for adoption.

There are technology players who are offering alternative payments integration with existing POS solutions (Paypal, Levelup, others) and others (including above) who can build it into future releases using the cloud based integration approach. We are identifying solution partners and vendors globally who have built assets for integration of alternative payment tech in POS. These solutions can be licensed or a partnership/JV or a tie-up can be formed depending upon the requirements and the time to go-to-market.

To know more, develop a roadmap and work with a partner please Contact Us

MEDICI Team

MEDICI

MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI team who collaborate to create FinTech insights.

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