Terminal Velocity: What’s the Next Phase at the Point of Sale?

Terminal Velocity: What’s the Next Phase at the Point of Sale?

Terminal Velocity: What's Next at the Point of Sale?

Charles Keenan

Charles Keenan

Charles Keenan has written about payments since joining the American Banker as a staff reporter in 1997, a time when automated teller machines were appearing just about everywhere but people's living rooms thanks to the relaxation of surcharging rules.

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Over the past several years, the idea of what constitutes a 'point-of-sale terminal' has challenged old conventions of the stationary checkout counter. First, dongles hit the market, turning tablets and smartphones into point-of-sale (POS) devices. Then the seamless experiences of Uber and Lyft arrived. And now, retailers offer in-app purchases for in-store customers. 

Yet in some ways, the mobile POS revolution is just getting started. Countertop systems are still well entrenched, especially with large retailers. And, as we know from EMV, change and widespread adoption can be slow. Mobile wallets that use near-field communication (NFC) haven't yet gained meaningful traction. Instant loyalty rewards at retail stores have been difficult to integrate. 

Yet there are signs of getting closer to a tipping point. The opening in January of Amazon Go, a convenience store, shows how mobile can be used to create a brick-and-mortar checkout experience without a cashier. 

In terms of an experience, it's like Uber meets 7-Eleven. In the store, situated in Seattle, customers tap their phones at gates when they enter, take items off the shelf such as milk, bread and premade meals, and leave without checking out.

"It's a completely seamless, immersive experience for payments," says Irfan Nasir, head of product and marketing for Ingenico North America. "Systems of the future may be that the terminal as you see it will disappear."

The technology goes wide

Amazon Go may be a highly futuristic example, but it has deployed technology similar to that found in self-driving cars, such as cameras and sensors. The technology monitors when products are taken from or returned to the shelves, with items added to a virtual cart. Amazon sends a receipt to customers shortly after they leave the store.

This isn't to say countertop terminals will go the way of the flip phone anytime soon, but Amazon’s emphasis on technology to create a fast and convenient checkout experience is something to think about, says Marc Castrechini, vice president of product management at merchant acquirer Cayan, a subsidiary of TSYS.

"That model itself is not realistic for everybody, but it's actually the right thing to aspire to," Castrechini says. "If we can identify consumers on the fly or in some frictionless way, then there are a lot of capabilities you can start to enable."

Removing the counter

The demand certainly is there to use the phone to purchase items at retailers, as customers increasingly use their mobile device to pay. About 68 percent of consumers plan to make 50 percent or more of their in-store purchases using their digital wallet within two years, according to a 2017 TSYS U.S. Consumer Payments Study, released in April.

Among retailers, portable platforms have become increasingly important in terms of mobile orders and payments, allowing staff to roam and greet customers. "Merchants want to get people out from behind those big desks where they are just collecting money, and have them on the sales floor," says Allen Weinberg, a partner and co-founder of Glenbrook partners, a payments consulting firm.

In fact, shoppers who interact with a sales associate are 43 percent more likely to purchase a product, according to a Mindtree study of 600 U.S. consumers. Their transactions also have 81 percent more value.

Apple was an early adopter of this technique, when it started using iPhones as POS terminals back in 2014, moving away from mobile tablets. Retailer associates now can check inventory and shipping information, and email a receipt. "Merchants really love those things," Weinberg says. "There is a lot of value in the non-traditional definition of a terminal."

Shoppers who interact with a sales associate are: 43% more likely to purchase a product and their transactions have 81% more value.

Game on

Square Reader, which debuted in 2009, prompted acquirers to come up with their solutions. Now, First Data uses Clover Go and VeriFone PAYware. Ingenico sells mobile POS card readers and tablet POS devices. Cayan and Poynt have their own proprietary mobile products.

In this competitive market, one key for mobile to reach its potential will be providers being able to advance processing power in the cloud. If retailers truly want to offer targeted couponing and reward loyalty, they need to be able to harness all of the information in their database, Nasir says. "You have to gather all that data," he says. "But you have to run a huge processing engine in the cloud that can handle your omnichannel commerce vision." 

Analytics must be used to maximize revenues with customers in the store by knowing who they are, where they are, and even anticipating what they will buy, he adds.  "That monetization capability of predictive engines, that is what we are working on and that is what is missing right now," he says.  

And that would make the use of mobile POS in the store even more appealing.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by Charles

Charles Keenan

Charles Keenan has written about payments since joining the American Banker as a staff reporter in 1997, a time when automated teller machines were appearing just about everywhere but people’s living rooms thanks to the relaxation of surcharging rules.

His work at the American Banker included writing about credit and debit cards, merchant processing, and bank stocks. He later freelanced for the Banker and industry publications such as Banking Strategies, Bank Director, Community Banker, and U.S. Banker. He also writes about investing, insurance and health care, and is based in Los Angeles.

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