The traditional point-of-sale (POS) payments terminal resides physically at the counter-top of the merchant. The terminal it self is a dedicated device where the hardware and software are bundled together as to nail security and supplier and scheme control at the same time. New approaches have surfaced that comprise a thin client to interact with the payment method used by the payer and all intelligence and connectivity with the schemes or payments provider is done at a server somewhere else. This set-up is addressing a critical issue the POS infrastructure is traditionally confronted with where the combination of the two elements in one dedicated physical device leads to problems in upgrade ability and adding or replacing schemes due to a high dependence on terminal replacements.
Trends a future proof POS infrastructure should address in conjunction:
- 1) Fragmentation of the payment landscape at the consumer level. Ideally multiple national and international debit and credit schemes and other payment providers should be able to be sharing the same POS terminal infrastructure where at the POS level it is possible for the merchant to choose which schemes and payment methodologies have to be supported to optimally cater its clients.
- 2) Terminal proliferation to non-counter top locations (vending, ticketing etc)
- 3) Seamless use in store and on-line: where does brick and mortar start and where does internet end, even at the shop floor level?
- 4) New technologies like NFC to interact with the Payment infrastructure
- 5) Easy integration with back-end and enterprise software of the merchant and or supply chain partners.
To me adapting to a dynamic fragmented multi-scheme environment, is the main challenge for a new POS infrastructure. The ideal POS should be able to link economically to new payment schemes and payment products/apps.
This setup depends on the use of POS terminals that can host the thin client approach, whether in store or on-line. In practice this means the POS terminals at merchants have to be replaced, for the current ones can not cater for this. Replacing POS terminals is a big hurdle for rapid market adoption of any POS model. The replacement of terminals has historically been the main hindrance in innovation and penetration of new POS technology.
There are plenty of examples where tablets and smart-phones are used as the physical foundation for POS terminals (e.g. Square, iZettle). Much can be said about this technical foundation at this point in time but the trend is clear: the consumerisation of computing devices will lead to the demise of the supplier unique POS terminal. At least merchants will be very interested to look at this development.
In the UK, PayPal claims to have registered interest from almost 11,000 small business for its forthcoming Chip and PIN reader, which was showcased at Mobile World Congress in Barcelona last month. Nb via Finextra: PayPal launches iPad point-of-sale device.