Top Predictions for Mobile POS Technology in 2015
Before we get to pay with our cards, we typically have to queue at a cash register first and finally insert a credit or debit card into a point-of-sale terminal. That will start to change in 2015. Consumers will be able to cut the line because more and more sales associates will be equipped with mobile POS (mPOS) terminals — small, high-tech devices connected to smartphones or tablets — in order to process our payments on the sales floor.
Although cutting the line is nice for consumers, mPOS solutions are even more beneficial for retailers. With mPOS devices, sales associates can be empowered to extend sales to goods from the online store that will be delivered to the consumer's door step if not available in-store.
In 2015, more and more retailers will provide a better customer experience not only by providing more choices, including online products, but also by allowing customers to cut the line and pay directly via a sales associate. The number of early adopters will grow in the U.S. first because U.S. magnetic strip technology is inexpensive and easy to implement. We'll also see first movers in Europe and Asia, although the EMV chip and PIN technology is more complex.
Why now? On the one hand it took e-commerce platforms like hybris or Demandware some time to provide in-store functionality. On the other hand the payment industry had to comply with new security requirements like higher encryption — e.g., DUKPT, Point-to-Point Encryption (P2PE). Right now, technologies are available and certified, and the retail industry can put the puzzle together in order to provide solid in-store solutions.
Established local banks and payment providers will see more international competition in 2015. To date, POS terminals have been domestic and could only be used in a few countries. In each and every country, retailers had to use different POS terminals and different banks. In 2015, mPOS terminal adoption will allow retailers to use one type of mPOS device globally that processes all kinds of cards, including Visa, MasterCard or even China Union Pay (CUP) on one terminal. There's no need for several banks either. Payments can be processed through just one international payment service provider (PSP) who can route payments to banks all over the world.
Apple Pay will speed up the deployment of mPOS technology in 2015 because Apple Watches and iPhones can also be used if retailers use NFC-equipped mPOS terminals. A strong competitor to mPOS devices are QR code solutions like PowaTag that allow consumers to take a photo of a QR code, order and pay with their phone. However, QR code solutions use online payments that are slightly more expensive for retailers than card-present payments on a mPOS terminal. That might become an issue when in-store mobile payment volumes grow.
2015 could also see smart merchants cutting significant costs for their PCI data security. Using mPOS terminals has the benefit of the mandatory security requirements of Visa and MasterCard: mPOS devices and payment providers need to use high encryption standards (DUKPT) and comply with P2PE standards. That's the reward. By using this secure technology, retailers avoid any PCI DSS security responsibility themselves, which for international retailers can save costs in the range of millions.
This technology will also mean that anonymous in-store consumers will grow to be known, repeat customers who can be rewarded. When sales associates order online products to be sent to customers, they're identified even without a loyalty card scheme. With access to a customer profile, sales associates will get a lot of flexibility to provide instant rewards.
The technology is already available, however, 2015 will be the year of adoption.
Ralf Gladis is CEO of Computop, a global payment service provider.