11/12/2014

By Ralf Gladis, CEO and co-founder, Computop


Before we get to pay with our cards we typically have to queue at a cash register first and then insert a credit or debit card into the POS terminal. This particular behaviour will start to change in 2015. Consumers will be able to cut the line due to the increasing number of sales agents who will be equipped with mobile POS terminals – small high tech devices connected to smartphones or tablets in order to process payments on the aisle.

Although cutting the line is compelling for consumers, mobile POS solutions are even more beneficial for retailers. With mPOS devices, retailers can empower sales agents to extend sales of goods from the online store, goods that will be delivered on the door step if they are not available in-store.

In 2015 more and more retailers will provide a better customer experience not only by providing a bigger product choice including online products but also by allowing customers to cut the line and directly pay at the sales agent. The number of early adopters will grow in the US first. The reason being that US magnetic stripe technology is cheap and easy to implement. Along with the US, we will also see first movers in Europe and Asia, although the EMV chip-and-PIN technology is more complex.

It may seem like this mobile POS revolution has taken ist time to take hold. It seems like, as an indsutry, we’ve been talking about it for so long. Understandably, it took e-commerce platforms such as hybris or Demandware some time to provide solid in-store functionality. And whilst they were doing that, the payment industry had to comply with new security requirements like higher encryption (DUKPT, P2PE). However, now it seems that time and circumstance is creating the perfect story for Mobile POS. The technologies are available and certified and the retail industry is putting beginning to provide solid in-store solutions.

Futhermore, 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, the high estimation of mobile POS terminal adoption will allow retailers to use globally one type of mPOS device that processes all kinds of cards including Visa, MasterCard or even China Union Pay (CUP) on one terminal. No need for several banks either. In this scenario, payments can be processed through only one international payment service provider (PSPs) which can route payments to banks all over the world.

Additionally, Apple Pay will speed up the deployment of mPOS technology in 2015 because Apple Watches and iPhones can also be used if retailers deploy NFC equipped mPOS terminals. A strong competitor to mPOS are QR code solutions such as PowaTag that allow consumers to take a phote of a QR code, order and pay with their phone online. However, QR code solutions use online payments that are slightly more expensive for retailers than card present payments on an mPOS terminal. That might become an issue when in-store mobile payment volumes grow.

Finally, 2015 could also be a year of smart merchants cutting significant costs for their PCI data security. Using mobile POS 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 (Point-to-Point Encryption) standards. That’s the reward: By using this secure technology, retailers aviod any PCI DSS security responsibility themselves, which for international retailers can save costs in the range of millions.

This technology will also mean that customers who previously remained anonymous to retailers, will become visible, trackable and rewardable. When sales agents order online products to be sent to customers, they are identified even without a loyalty card scheme. With access to the customer profile, sales agents will get a lot of flexibility to provide instant rewards.

Although the technology is already available, 2015 will be the year of adoption.