The flood of mobile-centric point of sale (POS) offering provides many options for retailers, but there's still a long road ahead to adoption on the consumer side.
To justify the investment in new retail POS solutions, there needs to be equal emphasis (and innovation) devoted to consumer-facing digital payment solutions to create the network-effect required for adoption.
Updates at the POS are Just One Piece of the Solution. Retailers contemplating mobile POS adoption must first consider how digital paymentswhether Apple Pay, Google Wallet or otherswill play a role within their new systems. Depending on retailers' size and business model, this integration may take on different forms.
Quick-service restaurants, for example, can create major cost savings opportunities by pairing a mobile POS with consumer digital wallets.
Combining payments, powered by reloadable stored value and connected to loyalty programs, can create a great experience at the POS for business that process frequent, small-ticket transactions (e.g., Starbucks & Dunkin Donuts). The streamlined activity at the point of sale reduces labor costs and increases throughput. These savings are combined with a reduction in transaction costs as consumers reload value onto their gift cards in larger denominations (e.g. $25, $50, or $100 at a time). As opposed to getting hit with a fee every time a customer swipes, the merchant is only charged when customers reload the card balance. These savings can be passed onto the consumer in the form of loyalty points or other discounts, creating engagement and fostering brand loyalty.
The convergence of mobile POS and digital payments also bolsters all marketing initiatives by connecting data-rich online activity to offline transactions, giving businesses clearer insight into customers' buying behavior and opening the door to more targeted remarketing tactics aimed at the consumer on the go.
Keep your options open. Mobile POS solutions are important developments for the future of payments, but not all choices will be the right ones. Merchants need a way to assess vendors peddling solutions that will impact the consumer experience at the POS. From frictionless payments, to cryptocurrencies, to loyalty, coupons and e-gift cards, merchants must be careful they dont choose a mix of solutions that create an inefficient consumer experience. If they make the wrong choices, they will pay the price of these inefficiencies in more ways than one. Imagine a consumer having to open one app to pay, another for an e-gift card and a third to claim loyalty points.
How can merchants avoid these outcomes without becoming a digital payments expert? The answer is actually not that difficult. Unless you are a merchant with a frequent (perhaps even daily) use case, like a Starbucks, it is unlikely that your app will be the center of gravity for payments, gift cards and loyalty. Look instead to who is wining the digital wallet wars, with the early lead going to Apple Pay, Google Wallet and perhaps PayPal. Ensure that the vendors supporting your loyalty, e-gift cards and coupons have a plan to connect their solutions with these leading wallets, as they all offer APIs to enable such connections.
At the POS, look to Apple for guidance. When Apple did not include NFC in the iPhone 5, many pundits thought NFC was doomed. All that changed in the fall of 2014 with the NFC enabled iPhone 6. If your merchant service provider is pitching a new POS and does not have technology to support NFC (the choice of both Google and Apple) find another merchant provider.
Of course the consumer adoption side of this network-effect is not in your control, but at least youre betting on the best horses who already have the lead and may already be pulling away from the pack.
In today's payments race, the winners and losers will be determined by what's easiest to use. That alone suggests Apple may have an advantage. Retailers of all sizes have a decision to make, and blindly relying on vendors could have costly results. Do your homework and set a course for success. Early adopter consumers toting digital wallets will find you, reinforcing you have made the right decisions.
Tyler Roye is CEO and co-founder of eGifter.
