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Comment: The beginning of the end for POS?


Point-of-sale (POS) terminals have been a mission critical system in many businesses for decades. From mechanical cash registers to modern, software-controlled devices, to the latest models boasting touch-screens, integrated credit card readers and advanced management capabilities, today’s POS terminals are still responsible for handling the majority of retail transactions.

Many retailers are looking to replace their aging POS systems. It is a major undertaking: The cost of rolling out new devices to a large retail chain can run into millions of dollars, and to make matters worse, the POS market is controlled by a few players with relatively expensive maintenance options. Fortunately, recent changes in mobile technology are offering an alternative.

Moving to a mobile future

Trends today indicate a move away from fixed POS terminals to mobile devices. Currently, some retailers allow customers to charge small transactions through their smartphones back to the mobile provider directly. And while larger payments still require a credit card, miniature card readers like Square, launched in 2010 by Jack Dorsey, co-founder of Twitter, are available to consumers to plug directly into an iPhone, enabling anyone to convert theirs into a payment device. Similarly, mobile accessories firm Intuit created a mobile phone case that contains a built-in swipe card reader. More devices are certain to follow – some manufacturers are even building card readers directly into their phones.

These radical implementations have enabled potential for new customer interactions during a purchase. With their smart phones, customers can collaborate with each other, discussing purchases with friends, and offering recommendations to others. In short, what we’re seeing is the dawn of what we call ‘social shopping’, and many studies indicate it’s preferred over traditional counter transactions. Expect to see more of it in the future.

Simply ‘wave and pay’

If swiping your card through a phone sounds impractical, consider the latest moves towards contactless payment. We have already seen the credit card providers embracing near-field technology that only requires a customer to place their card near a payment terminal to carry out a transaction. Mobile accessory manufacturer Tyfone has recently partnered with a financial firm to incorporate the same contactless RFID chips into their products, providing convenient, payment–capable devices that are better integrated, and more robust than a swipe-based reader.

Naturally, there are security problems in carrying around portable devices that hold payment information. But biometric technology, like the Facecash iPhone app, might be the solution. Facecash allows customers to take a picture of their face as a secure ‘token’ proving their identity during a purchase. Others are developing similar technologies. It’s only a matter of time before the practice is commonplace.

The POS is mobilising

The increasing popularity of smartphones illustrates that shoppers are overcoming their reluctance to use mobile devices in new ways. And while it is unlikely that we will see the instant demise of the POS terminal, we could see it steadily eliminated from certain retail verticals, particularly those selling big ticket items. For some stores, the POS might be consigned to a less-visible role, such as a ‘cash purchase’ counter at the back of the store.

We should consider the multichannel implications of the trend. Many organisations are effectively ‘siloed’, carrying out separate operations between traditional stores and more recent e-commerce sites. The gap between stores and e-commerce is both cultural and technological. A Chief Information Officer considering a full-scale POS re-platform may bypass all the difficulties and leap frog to ‘off the shelf’ mobile devices instead.

It is not clear which of these new payment methods will dominate. But one thing is certain: the POS is mobilising, and mobile devices are becoming transactional. Retailers will need to adapt to meet the expectations of the new mobile customer.

Note: The views expressed here are those of Roger Mitchell and do not necessarily represent the views of Retail Gazette.

Published on Wednesday 07 September by Editorial Assistant

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