How mobile POS is transforming retail
Mobile point of sale (mPOS) technology promises to continue to transform the customer’s shopping experience in 2014 and beyond. Gartner forecasts an mPOS market valued at $617 billion with 448 million users by the end of 2016, representing 42% annual growth.
Retail is one of several sectors poised to benefit from mPOS. With that in mind, here are five trends that every retailer needs to be aware of in the space.
Mobile POS moves up market: While most technology disruptions are initially adopted by large companies and then trickle down, mPOS started at the micro-merchant level and is now moving up market. Why? Because early mPOS tools — rudimentary readers that plugged into phones, with no software integration to back-end systems — are not enterprise class. They don’t have the security, integration, reporting or support that a Tier 1 retailer requires, and they often force merchants to use a particular credit card processor. That will change in 2014, however, as vendors launch enterprise-ready mPOS solutions. ROAM is already working with several Tier 1 retailers, including a major home improvement chain, on an m-commerce solution that combines scheduling, in-home service delivery inventory and mobile payment acceptance to extend the capabilities of the retailer’s fixed payment terminals into employees’ service trucks and customers’ homes. Integrated with back-end inventory and ERP systems, this is not your micro-merchant’s mPOS system.
Tablets become the mobile POS device of choice for retail: Tier 1 retailers such as Nordstrom Rack have equipped each employee with an iPhone to enable on-the-spot checkout. Increasingly, however, we are seeing Tier 1 retailers gravitate to tablets, which have larger screens for featuring products and capturing signatures, are more difficult to pilfer and are typically faster and more powerful than mobile phones. ROAM’s parent company Ingenico is working with Apple stores in Europe to equip associates with iPad-based mPOS solutions for line busting and customer service.
Mobile wallet and mobile POS integration becomes the norm: Many people — even in the financial services industry — see mobile wallet and mobile POS integration as an either/or scenario. The fact is mobile wallets and mobile POS systems can be easily integrated for secure mobile-to-mobile transactions. The ideal scenario is one in which retailers can accept mobile wallet payments on a mobile POS device. Mobile wallet payments should be viewed as just another currency, and should be accepted at both fixed POS stations and mobile POS ones. Based on our discussions with retailers, we think this will be the norm by late 2014. Interestingly, many plan to accept these alternative forms of currency on their mPOS systems first because it’s so much easier to push out updated software in that environment, and only hard-code acceptance into fixed stations once the market shakes out and clear winners of the mobile wallet arms race emerge.
Apps integrating payment-processing capabilities: Another area that many pundits see as ‘either/or’ are mobile payment apps and mobile POS. Again, we believe the power lies in the integration of the two, and we are actively working with several app developers who want to do just that. Think about how ecommerce solutions evolved: from point solutions (e.g., shopping cart tools) to integrated solutions (e.g., Akamai), an evolution that took about three years. In this scenario, mobile app developers are going to play a much bigger role in 2014, as companies require customized solutions that are part of a much broader m-commerce application encompassing storefront creation, inventory tracking, mobile payments, delivery tracking and more. Ogone is one vendor already doing interesting work in this area. It’s working with MasterCard to develop and launch MasterPass, a digital platform that simplifies online purchases made from connected devices including PCs, touchpads and smartphones.
Alternative forms of payment will begin to take hold: We are already seeing iTunes being used as an alternative form of payment in some countries, and expect to see more of the same from companies such as Google, Facebook, PayPal and Amazon. Even Bitcoin seems to be gaining some traction: Tesla buyers can now pay using Bitcoin, and apartment rental site RentHop now accepts Bitcoin for apartment rental advertising. Other areas to watch are gift-card payments via mobile, and loyalty programs that allow customers to apply points as payment via mobile. All of these alternatives are to the detriment of cash, by the way, and retailers who have not yet explored how they might accept these new currency forms had better figure it out quickly.
Alternative authentication methods will emerge: Apple’s new Touch ID, which uses your fingerprint as a passcode, has put biometrics in the spotlight. Other new authentication methods include PIN on mobile and dual authentication. It’s a constant race to stay one step ahead of the hackers. These new options need to be incorporated into mPOS and m-commerce platforms, so it’s a space worth watching. Eventually, PCI may require companies to implement one or more of these methods in order to remain compliant.
mPOS technology is evolving faster than any other technology I’ve seen in my 30 years working in the payments industry. Let’s catch up one year from now to see if our predictions were on target.
Ken Paull is CEO of ROAM, a mobile POS solutions provider company that is part of Ingenico.