Top Payment Processing Trends Making Waves in 2019

Running a successful business requires succeeding at a number of important steps. For starters, you need to pick the right product or service to provide. You also need to have the right marketing and advertising strategies in place to get the word out about your offerings.

Then there’s the all-important matter of getting paid. Decades ago, setting up the payment side of things was as simple as purchasing a cash register and writing up receipts.  But it’s 2019, and we’re past the point when a simple cash register will do. There are more players and devices in the space and shoppers are increasingly adopting alternative payment methods to fit their lifestyles.

This year, we can expect some pretty exciting trends to shake up payment processing. Here are the top five we’re seeing:

Mobile payment adoption will continue to grow

Back in 2014, Apple introduced a much larger audience to the mobile wallet market. It wasn’t long before a number of other big names – including the likes of Google, Chase, and Samsung – followed suit. By 2015, there were nearly a dozen mobile-wallet platforms from which businesses could choose.

By 2017, 39% of U.S. consumers were already using smart wallets. And today, 10% of Millennialsreport using mobile wallets to make all of their payments and adoption is growing with other demographics, as well.

Some experts even believe mobile wallets will become one of the most important features consumers consider when buying smartphones.

This helps explain why mobile payment volume is expected to reach $503 billion by 2020. With just a year to go, it’s probably safe to assume that more and more customers will be taking out their phones at the cash register.

That’s why if you’re not considering mobile payments yet, it may be time to look into the technology. Do a bit of research into where your customers stand with mobile payments. Survey your shoppers to get their take on Apple Pay and other solutions. If you know other merchants that are accepting mobile payments, talk to them to see how things are working out.

Then once you’re willing to move forward, talk to your payment provider and inquire about their mobile payment solutions.

“Buy now, pay later” will become more popular

Modern consumers (particularly Millennials and Gen Z) are rapidly gravitating towards alternative payment methods.

One example? “buy now, pay later.” It’s a service that allows shoppers to immediately take home their purchase while paying for their products over a number of installments. “Buy now, pay later” has proven to be a boon for merchants (especially retailers) and consumers alike.

As retail expert Shelley Kohan notes:

With buy-now, wear-now, pay-later, the customer takes the product with them at the point of transaction and e-com goods are sent at the transaction point. The big win for retailers is they don’t have to figure out where to store layaway goods, deal with customers who change their minds and handle the mound of abandoned product.

As retailers and brands desire to capture the hearts, minds and wallets of millennial and Gen Z generations, understanding what drives their decision-making is critical. Connecting through a social cause, giving a voice in the development of a product and empowering customers with alternative interest-free payments that are convenient and simple to use are touchstones that resonate with the next gen.

What does this mean for you? If you’re a retailer selling high-ticket items, it may behoove to look into payment options such as “buy now, pay later.”

Remember, consumers want more flexibility with their payment options, and that’s not going to change anytime soon. If you’re unable to serve them in the ways that fit their lifestyle, they will likely turn to your competitors.

Zelle is moving right past Venmo

While Zelle and Venmo are primarily for peer-to-peer payments, it’s still a good idea to track trends in this space, as they may have some implications for your business.

Even though it debuted a decade ago, Venmo really only picked up steam over the past couple of years or so. People finally realized how easy it was to pay each other or split a bill in every cashless society.

Unfortunately, for Venmo, their rein didn’t last long. In just under a year, Zelle went from nonexistent toking of the payment-app-hill.

Like Venmo, it allows users to send money to someone else without using cash, wire transfers, or checks. So, what does Zelle bring to the table? In a sign that traditional financial institutions are finally “getting it”, Zelle was introduced by the country’s seven largest banks (Bank of America, Wells Fargo, JPMorgan, Capital One, US Bancorp, PNC, and BB&T).

That’s all well and good for consumers,  but if you’re an SMB, why should this make the list of emerging payment-processing trends for 2019?

Here’s the thing: Zelle may be eying a move that would introduce its services to small businesses, making it easy – and secure – for them to accept payments through the app. Once that happens, it’s likely that Zelle will explode in popularity.

Obviously, nothing is set in stone yet, but we highly recommend that you watch this space. You want to be prepared from when either Zeller or Venmo decides to make bigger moves towards the SMB space.  

Payment security systems continue to evolve

As we just touched on, security is always a concern when it comes to disruptive technology.

However, security measures can be a disruption in and of themselves, too.

One example to look for in 2019 is biometric authentication (e.g. using fingerprint IDs to validate transactions).

While the idea may seem a bit far-fetched to some, it’s estimated that biometric authentication will support over 18 billion payments by 2021. That will mean a noticeable expansion of the technology – and perhaps even consumer demand for it – in 2019.

Keep an eye out for this trend — as well as other security issues — in the coming months. As we mentioned before, falling victim to fraud doesn’t just damage your finances, it erodes customer trust and could kill your reputation.

Acting on these important trends

Though adopting some of these trends may represent a major change to your company’s current operations, there’s still plenty of time to start the process. Pick one of the five above and then take the first step toward keeping up.


New ETA Report: The State of Mobile Payments in 2019

June 5, 2019

Mobile payments represent the next frontier in seamless commerce. Our mobile devices are the hub of nearly all our daily activities, and they have the potential to become the nexus of all our commercial interactions as well. When the payment form factor is a mobile device, instead of a card (or a check, or cash), all the contextual information – like rewards numbers, coupons, payment history – can be automatically loaded onto the transaction, allowing for a customized, data-driven user experience. And it all happens in the background: one authenticated tap and it’s securely done.

Consumers have a lot to gain from embracing mobile payments, not least of which is the sheer number of payment options. There are many different ways to pay with a mobile device, from dedicated peer-to-peer payment apps like Venmo and Square Cash, to payment capability embedded in retailer apps like Starbucks’ mobile app, to QR-code based apps like Alipay and WeChatPay, to tap-and-pay mobile wallets like Apple Pay, Google Pay and Samsung Pay. In-app mobile payments, whether in the context of gaming or retail, are another fast-growing segment, as are payments made at a mobile Point of Sale (mPOS) like those offered by Square or CardFlight.

In 2018, 55 million people in the U.S. used their smartphone to make a payment at a physical point of sale, whether by loading money into a closed-loop mobile app (like the Starbucks app) or by loading a credit or debit card into an open-loop mobile wallet (like Apple Pay, Google Pay, or Samsung Pay) and using it to pay at the point of sale.

The ETA Mobile Payments Committee reviews the State of Mobile Payments in the United States in its latest whitepaper. The report examines contactless transactions at the point of sale that are made with a mobile device, and presents data on adoption, usage, consumer attitudes, and projections for the future. The payments industry is working to make paying with a mobile device as natural as swiping or dipping a card or pulling out a dollar bill. Read the full report here.

Source: https://www.electran.org/publication/transactiontrends/new-eta-report-the-state-of-mobile-payments-in-2019/


Do You Really Need An EMV Chip Card Terminal?

If you have never encountered a credit or debit card with a chip embedded in it, you’ve probably been living under a rock for the past 3-4 years. In which case, you’ve got an awful lot to catch up on and we’ll come back to chip cards after you’ve covered the important stuff. However, if you haven’t been living under a rock and you’ve seen a chip card, chances are you’re at least familiar with the new payment process: dip the card in the EMV slot, wait, enter your PIN or sign for the transaction, remove card, and go. But as a business owner, you might still be waffling on whether you need to finally get around to accepting chip card transactions. After all, do you really need an EMV card reader?

Let’s talk about chip card readers and what they mean for businesses, and discuss whether it’s essential for merchants to accept chip cards.

What Is An EMV Chip Card?

So we’ve talked about how EMV cards require you to “dip” the chip. But why? What makes EMV more complicated than standard magnetic stripe (magstripe) transactions?

EMV simply stands for EuroPay, Mastercard, and Visa, the organizations that pioneered the technology. It’s actually the name for a set of security standards used for credit card processing. EMV has been the dominant technology in Europe and Canada for decades, but most of the world has switched over to EMV.

EMV uses a computer chip to perform complex, dynamic verification that the card is genuine. These computer chips can store and process much more data than the magnetic stripes on cards, which makes them much harder to counterfeit.

Magstripe cards are relatively easy to “clone” — that is, to copy a stolen card number onto a blank card to be used at a brick and mortar store. EMV prevents cloning, and because the verification process is dynamic (it generates a unique code each time the card is used, whereas magstripe transactions use a static code), it also helps prevent theft of the card using a skimmer. A skimmer is just a piece of hardware installed over a magstripe terminal that copies the card data when a card is swiped — the scammer installs the skimmer on a terminal and then retrieves it later to harvest the card data, presumably to sell to someone else who will try to use it to make expensive purchases online, or clone a card for themselves.

EMV chip cards help reduce card-present card fraud, which has been rampant in the US for a while now. That’s good news for anyone who runs a brick and mortar storefront — EMV protects you against some kinds of chargebacks by preventing fraudulent transactions from being possible in the first place. (It’s not such good news for online businesses, because instead of cloning cards, scammers are simply moving to the Internet to make their purchases.)

The key takeaway here? That tiny little computer chip in a credit or debit card is way more powerful than the magnetic stripe on the back of the card and therefore makes it harder for scammers to steal or use stolen credit card numbers.

The EMV Liability Shift & Your Business

You might be wondering why chip cards have suddenly appeared on just about every single card a customer has. All of that has to do with a liability shift that took place in October 2015 — but the plans were already in motion years before that.

The card associations (Visa, MasterCard, Discover, and American Express in the US) got together with banks and decided that they were going to start issuing EMV chip cards, bringing the US in line with all of the other countries that already rely on EMV. But it’s one thing to send chip cards out to customers — it’s another thing entirely to get business owners to update their hardware to EMV-compliant solutions.

The solution, then, was that the banks and card networks agreed to stop absorbing the costs of any fraudulent transactions that could have been prevented with an EMV chip card terminal. They set the date for this liability shift to October 1, 2015. After that point, the business would be eating the cost of any fraudulent transactions — meaning that instead of the banks and card networks reimbursing the cardholder for the sale, the merchant would eat the cost of the transaction (as well as the cost of any merchandise) in addition to any chargeback fees assessed by the payment processor.

(If you’re wondering, certain types of businesses are exempt from the current liability shift. For example, gas stations have until 2020 to get EMV-capable readers for their pumps. However, brick-and-mortar businesses on the whole already need to be compliant.)

Let me be clear here: There is no law demanding that you accept EMV transactions. You aren’t doing anything illegal by not having a chip card reader. However, you are putting your business and your livelihood at risk in the event that you do encounter a scam artist trying to take advantage of your lack of EMV support.

Payment processors are generally free to take whatever measures they want or feel necessary to encourage their merchants to upgrade to chip card acceptance, too. In some cases, a select few merchant account providers have started charging EMV non-compliance fees for merchants who opted not to upgrade their hardware after a certain date.

Now that we’ve covered that, let’s get to the point: In the lead-up to the EMV liability shift, sales representatives for payment processors and software providers alike were pounding the pavement, trying to convince merchants to upgrade to EMV, usually with the promise of a free or discounted EMV chip card terminal. You can still find these sorts of offers, but we strongly encourage you to be wary of offers of “free” hardware because you almost always end up paying the cost back in some other way (usually higher fees). That’s not to say there aren’t legitimate, high-quality merchant account providers with free hardware. They exist, but they are few and far between; you need to learn how to recognize the tactics used by less reputable providers and steer clear of them.

Credit card terminals can take many forms, with a variety of features (such as a customer-facing PIN pad or a wireless internet connection). However, for our purposes, you can separate them into two basic categories: (1) magstripe and EMV card readers, or (2) magstripe, EMV and NFC-capable readers.

The former are generally cheaper, because they have a simpler design and less hardware. You can still get all the other bells and whistles, so the exact cost for a terminal will depend on what features you want. As a ballpark estimate, you can expect a retail price of about $200 for a basic EMV chip card terminal.

The latter types of terminal usually cost a bit more, but are branded as “future proof.” That’s because they support magstripe transactions as well as the two technologies that are likely to dominate the US payments space in the coming years: EMV (chip cards) and NFC (contactless payments, such as mobile wallets). Again, you can get a mix of features in addition to support for the different payment types, and the more features you have, the more you will pay. If you want to know more about NFC and why it matters to the US payments industry.

One of the major hurdles in EMV adoption has been the longer transaction times with chip cards: Instead of simply swiping your card, you need to insert it and wait for the terminal to tell you it’s okay to remove the card. And initially, EMV transactions were, well, slow and laggy. To combat this, the card networks have worked hard to develop solutions to reduce the amount of time the card needs to be inserted into the terminal. Overall, the time it takes to make a payment with a chip card has dropped considerably. However, keep in mind that exact times will vary according to the hardware manufacturer as well as the payment processor (and your own internet connection speed plays a role too).

What About Mobile Chip Card Readers?

“But wait,” you say. “I don’t have a POS or cash register, or even a physical storefront. I just take payments on my phone or tablet. And people are still giving away free magstripe readers. Why do I need to upgrade?”

The mobile processing space has been the slowest in terms of EMV chip card adoption. But even so, mobile chip card readers (the kind that connect to your smartphone or tablet) are starting to catch on, too.

Most basic magstripe readers still rely on the 3.5mm headphone jack, which is obsolete on recent iPhone models. Most Lightning connector magstripe readers are expensive.

Instead, mobile payment companies (and hardware manufacturers) have switched their focus to Bluetooth connections, which work with iOS and Android equally well. And rather than make just magstripe readers that work with Bluetooth, these devices also have chip card readers built in. (I need to point out that some headphone jack card readers do support EMV, but by and large chip card readers use Bluetooth.)

As with terminals, mobile chip readers tend to come in two designs: magstripe and EMV, or (2) magstripe, EMV, and NFC/contactless (often called “all in one” readers). However, mobile hardware tends to vary much more than terminals, so you will see some exceptions, such as the Square Contactless + Chip Reader which supports chip cards and NFC payments, but not magstripe.

 
Do I Need To Accept EMV Chip Cards?

EMV is officially here to stay. However — much to my dismay — magstripe transactions probably aren’t going away yet, either. So where does that leave us?

As a business owner, you should have an EMV chip card terminal or mobile reader. It is the smart decision to protect your business and it can also help win over customer trust by showing that you’re keeping up with the latest hardware and security measures.

If you’re a very low-volume business, or you’re in the type of industry with very small transactions (dry cleaners or coffee shops, for example), I will admit that the risk of a fraudulent transaction is fairly low. But it’s still a risk, and an EMV terminal (or mobile chip card reader) isn’t all that expensive.

If you’re a larger business, you have a high average transaction size, or you deal in the sort of goods that are desirable to scammers, you absolutely should be looking at an EMV terminal if you don’t already use one. Again, the cost of the reader isn’t all that much, and if you do deal with larger transactions, the cost of one case of fraud could easily be equal to the cost of an EMV terminal or reader.

If you’re not accepting chip card payments yet, it’s time to reach out to your payment processor and ask about upgrading your hardware. If you’re able to, this is also a great opportunity to shop around a bit and see if another payment processor can offer you a better deal on hardware as well as transaction costs.

https://www.merchantmaverick.com/really-need-emv-chip-card-terminal/

2019 Trends In Payments For Small Businesses

Over the last few years the small business landscape has gone through serious changes, perhaps none more than the merchant sector. Just about every advantage once reserved for big business has been somehow scaled, repackaged, or economized for the small business owner to leverage in order to accelerate their own growth. Innovations in industries like banking, advertising, and technology have empowered small business owners to focus on their driving vision instead of the multitude of administrative tasks that often slow things down. Now the question is, what are the trends and insights small businesses should be focusing on to take their businesses even further.

Philip McHugh, Senior EVP and President TSYS Merchant Solutions, talked about his top three trends for merchants in 2019. Let’s break down each one and consider their implications.

Trend 1: The strong economy will continue, but businesses must continue to get smarter.

“People talk about a retail Armageddon and there’s a lot of negativity out in the news, but actually, overall the economy has been incredibly strong. Companies and small businesses will have to be smarter and use technology in a smarter way to survive.” – Philip McHugh

The labor market is strong, new businesses have been opening, and profits are up, and as we have seen, technology is the great equalizer for small businesses. It can create efficiencies and amplify limited resources to help people get more done with less. It’s extremely important to remember that simply riding out a good economy is not a strategy for success. During the good times, it’s extremely important for small businesses to re-invest and upgrade in the technology that can provide efficiencies and help strengthen their business in order to weather the cyclical downturns that are sure to come.

Trend 2: The explosion of choice will continue to give small businesses buying power.

“The second trend I see with SMBs is the explosion of choice, the explosion of the overall offer. For our industry, that basic, simple device with simple merchant acquiring contract is going to fade out over time. Now we have to be much more solution led.”  – Philip McHugh

When it comes to purchasing for a small business there seems to be a seemingly endless range of choice. Ecommerce, social media, and easily available reviews and content have created complete transparency to make this the ultimate buyers’ market. Small businesses expect more from their vendors and suppliers, and we must do everything we can to deliver on those expectations.

Trend 3: Software, software, software.

“There are so many companies out there using software to simplify the life of the merchant, but I see this only growing and growing and growing in every single industry.” – Philip McHugh

The trend of integrated software vendors or SaaS companies is almost mind blowing, but it’s really amazing how these solutions have helped small business owners manage just about every aspect of their day to day. For small business merchants, the point-of-sale solutions have become really exciting. The back-office capabilities have become so powerful and easy-to-use and are now moving to become highly specialized for a range of major verticals like bar and restaurant, retail, medical and field service.

Ultimately, it’s about serving the customer.

 

 

https://www.tsys.com/news-innovation/whats-new/Articles-and-Blogs/Industry-Insights/Merchant/2019/2019-trends-in-payments-for-small-businesses.aspx


Payments Analytics Highlight Valentine’s Day Spending Trends

On this Valentine’s Day, insights from payments data show that Americans will continue to increase their day of love spending on experiences, according to an analysis from ETA member Mastercard. According to Mastercard SpendingPulse, which provides overall retail spending trends across all payment types, including cash and check, experiential purchases – restaurants and hotels – is set experience solid growth this Valentine’s Day.

For restaurants, retail sales could increase 5.4 percent to $15.3 billion today, Mastercard predicts. For hotels, sales could jump nearly ten percent year-over-year, reaching $1.4 billion.

Unlikely to feel the love tonight are more traditional Valentine gifts, the report said. Jewelry sales are expected to decrease this year to $1.1 billion, despite a 2018 Valentine’s Day performance that surged over 25 percent higher than 2017. Overall luxury sales are likely to be flat, Mastercard predicts, generated $250 million and falling just .4 percent.

Data from the National Retail Federation’s (NRF) Valentine’s Day Spending Survey predicts that consumers will spend $162 per person on average on Valentine’s Day in 2019, up from $144 in 2018. Despite the higher average spend, NRF data suggests a downward trend in participation in the holiday – 51 percent of Americans plan to celebrate the holiday in 2019, down from 55 percent last year and from a high of 63 percent in 2007.

Significant others aren’t always the focus of Valentine’s Day spending, the NRF survey found. Gifts for pets continue to be popular, the NRF report says – 20 percent of consumers will buy a present for the pets, totaling $886 million and dwarfing 2008’s $519 million. And 11 percent of Americans plan on treating themselves to gifts like clothing and jewelry; just under 10 percent plan to get together with other single friends and family.

 

https://www.electran.org/publication/transactiontrends/payments-analytics-highlight-valentines-day-spending-trends/


ETA Expert Insights: Imagining the Future of Mobile Payments

By the ETA Mobile Payments Committee

Our industry spends a lot of time trying to make our products and services invisible. That is, we try to make payments frictionless so that the end user doesn’t have to think about the process at all. We want consumers to focus on what they’re buying, not how they’re buying. The ETA Mobile Payments Committee works hard to make this seamless shopping experience a reality for everyone by promoting the adoption of mobile payments and identifying ways to expand the opportunities afforded by new technology. Below, committee members step back and consider what the mobile payments space will look like in 2025.

Q: Fast-Forward to 2025 – what is your wildest idea in terms of what will be hot in the Mobile Payments space?

Harry Hargens, TSYS: We may see a significant number of merchants (retail and restaurants) deploy technology that enables an “Uber experience”. Walk in, pick up an item you want to purchase, walk out. Or, finish your meal and just walk out. No interaction with a clerk, waiter, or POS required.  I can’t predict exactly how this will work, but I’m pretty sure that a mobile device (phone, wearable, or implant) will be involved.

Craig Ross, Apple: “Hey Siri, pay for my items.” This is the catch-phrase that I think will be commonplace in 2025. I envision a world where I will be able to select items in a store and place them in a lightweight, reusable, and biodegradable bag made from hemp. Once I’ve completed my shopping, all I will need to do is speak those six words and Siri will take care of the rest. I will not need to authenticate via TouchID or FaceID, as Siri will use the biometrics of my voice to authenticate the transaction and then leverage Apple Pay to complete the transaction. Also, since Siri will know where I am, based on geolocation, she will be able to also send along my loyalty credentials so that I receive my standard double-points or loyalty discount percentage. Talk about hassle-free (and hands-free) commerce …

Steve Klebe, Google: Conversational Commerce (“OK Google, I need a Tall Latte”) is here now and will become much more pervasive in the next 5 years. Starbucks’ integration with Google Assistant is available today across Android, iOS and any Assistant enabled device from a variety of purveyors.

Markiyan Malko, Paysafe: At storefronts I can envision the Amazon Go type of experience where a consumer effectively walks in, grabs what they want, and walk out. We have the tech today and by 2025 it will be cheap enough to deploy and integrate that many mid-large retailers will have it. In eCommerce, I can see the checkout experience getting more streamlined as offerings like Apple Pay in Safari grow and the W3C works on the Payment Request API to make the integration of payments simple for merchants.

 

 

Source: https://www.electran.org/publication/transactiontrends/eta-expert-insights-imagining-the-future-of-mobile-payments/

Why Every Business Can Benefit From a Point of Sale

There was a time, not long ago, when point-of-sale (POS) systems were almost exclusively for large, well-funded businesses. Large retail operations had the staff and funding to develop or buy such systems, as well as maintain and update them. This meant that the many added features that made a point-of-sale system so valuable were only available to large businesses.

Today, the reach of the point-of-sale system has changed. Turnkey options and customizability mean that POS systems are available to businesses of every size. And yet there are still huge numbers or sellers nationwide that have barebones terminals or even remain cash-only.

Business of all sizes in every industry can benefit from a point-of-sale system, but many don’t realize why. Here’s how the landscape has changed, and why every business can benefit from a point-of-sale system.

The Benefits Are Clear

It’s always been clear that there were huge benefits to well-made point-of-sale systems, but the question was previously an economic one — did the benefits outweigh the costs?

The main benefit of a point-of-sale system is how much it can simplify your business operation. When small business owners start up, they are often surprised at how much of their time is taken up by tasks that are well beyond their core expertise.

A good point-of-sale system can simplify or, in some cases, go well beyond merely accepting payments and virtually eliminate those tasks. A modern point-of-sale system can help with inventory, time-clock and employee management, taxes, discounts and pricing, and more.

The landscape is far different than it was a decade ago, when only large businesses could afford a point-of-sale system. Now, more businesses can afford and benefit from a point-of-sale system to make life easier for themselves, their customers, and their employees.

The Economics Have Changed

So while the capabilities and power of a point-of-sale system have long been undeniable, the economics of the purchase could not be justified by SMBs.

Times have changed. point-of-sale system prices are now far lower, which has made the tools that were once exclusively available to retail giants affordable for even small businesses.

Today POS systems come in various models, ensuring that a business doesn’t have to pay for a machine that gives them functionality they’ll never use.

POS Companies Know: One Size Does Not Fit All

A major benefit to modern POS systems is that they are often customizable. A one-location food truck, for instance, does not need the same tools as a major nationwide retail chain, yet in the past, this was often irrelevant as POS providers offered the same tools to everyone.

Today, you can find a mobile solution that fits your specific needs. Some point-of-sale options prioritize mobility while some prioritize organization among multiple locations. Some are created for restaurants while others cater to healthcare. But an SMB no longer needs to overpay for features they will never use—now, they have options available that cater to their unique circumstances.

Modern POS Systems Are Simple and Intuitive

Historically, point-of-sale system systems were too complex for a small business to bother with. The truly simple options were a cash register and maybe a card terminal, but anything more often caused headaches and constant service and troubleshooting calls.

Years of refinement have solved this problem. Today’s point-of-sale system are simple and easy-to-use, designed not for internal experts at the point-of-sale system company, but everyday workers. They update simply via the cloud and offer an intuitive user experience.

Something For Everyone

The technological tools once available only to the giants of retail are now available to all businesses. Modern point-of-sale system offer both powerful payment acceptance and other value-added features all in packages that are affordable to businesses of any size.

This technology makes life simpler and business easier. The POS landscape has changed, and today’s systems have something to offer every business.

 

source: https://www.tsys.com/news-innovation/whats-new/Articles-and-Blogs/Industry-Insights/Merchant/2019/why-every-business-can-benefit-from-a-point-of-sale.aspx

 


12 Ways Consumers Will Pay (And Be Paid) In 2019 And Beyond

The “Twelve Days of Christmas” is a holiday classic, though some of us at PYMNTS still don’t understand why anyone would want to take a partridge away from what seems like a pleasant existence in a pear tree. But in hopes of hopping on the holiday bandwagon — and providing data-backed insight in the hottest payment trends for 2019 — allow us to offer this list of a dozen ways that consumers (and some businesses) are paying now, methods that promise to play big roles in 2019.

For the most part — and unless otherwise noted — this list is built around the new “How Will We Pay” research report from PYMNTS in collaboration with Visa. The findings in the report, which is free for download, comes from the survey responses of 2,800 U.S. consumers who were asked about the devices they own and how they use them to buy things. Those consumers also gave details about the purchases they made in the past seven days, the devices they used to make those purchases and why they made a purchase with that device in that way.

The findings — reflected in the list below — take into account the newest payment technologies while also paying attention to legacy methods that for various reasons continue to command consumer and business loyalties.

So, how will consumers (and some businesses) pay?

#1: With Multiple Devices

Owning just a smartphone — which applies to 3 percent of the population — seems so ancient these days that it’s not even hip or retro (give it time, though). Merchants must appeal to consumers who shop and transact via various web-connected gear. That not only includes smartphones, tablets and other computers — 17 percent of consumers own those but no other such devices — but connected appliances and speakers (35 percent of consumers, with the smart speaker market experiencing significant growth), and wearables (whose users, on average, have annual incomes of $79,406). More generally, 36 percent of consumer own six or more devices, and you can bet that percentage will grow in the near term.

#2: With Their Voices

Voice-assisted retail is growing faster than many observers expected, and some 27 percent of consumers own a voice-activated device, up from 14 percent last year. Consumers are being well trained to use voice for web searches and other activities, and are buying voice-activated devices that can perform payment and commerce tasks. The lucrative “Bridge Millennial” consumer segment — relatively high earning and highly educated, and approaching their peak earning years — are particularly fond of this technology, with 31 percent of owning a voice-activated speaker. Moreover, Adobe projects that voice-assisted retail will prove to be a big hit during the 2018 holiday shopping season — and that consumers already devoted to the technology will buy even more gear for themselves and others.

#3: Via Automatic Payments

No one likes checkout friction, and the growth of automatic payments enables consumers to have seamless transactions and go on with their lives. In 2018, 49 percent of surveyed consumers expressed interest in making automatic payments at the gas station, up from 41 percent in 2017. That’s not all. Interest in making automatic payments at restaurants, rather than waiting for the check, increased from 37 percent to 39 percent.

#4: Via Quicker Payouts

It’s not just consumers who pay, of course, but business and other organizations. And no one likes to wait around for funds, whether they come via paychecks or disbursements. The ongoing deployment of real-time payment technology is helping to meet such demands while bringing payment infrastructure further in the digital age. Some 24 percent of consumers would like to be paid in real time, and a hefty 70 percent of consumers are interested in shorter pay cycles. Quicker payments can have wide impact: Consumers said that if they were paid faster, they would be able to better manage their cash flow (53 percent) and pay bills (53 percent).

#5: With Payment Cards

Don’t even think of counting out plastic, which still carries a wide appeal. The propensity to use credit and debit cards on connected devices is particularly high among Baby Boomers and Bridge Millennials — with 72 percent and 53 percent using these channels, respectively. Credit and debit cards are also the preferred method of paying when consumers travel abroad. Among the 54 percent of participants who had made a purchase from foreign merchants, 68 percent preferred using credit and debit cards while purchasing from them.

#6: With Person-To-Person Mobile Tech

It’s been a year of P2P payment gains, and all signs point to even more growth in 2019. Zelle — the P2P service backed by Bank of AmericaJPMorgan Chase and other financial institutions (FIs) — said in its Q3 results that transaction volume increased 16 percent year over year, and that the total amount of money moved increased 13 percent during that same time frame. In PayPal’s recent Q3 financials, Venmo played a significant part in the positive nature of that report, with Venmo’s total payment volume increasing by 78 percent year over year. Such growth has led to payment services providers making sure in incorporate P2P in their offerings, including for restaurants.

#7: With Biometrics

The promise of biometric payments — closely tied to biometric authentication and ID verification — was demonstrated recently in China on Nov. 11, otherwise known as Singles’ Day, a big online shopping event in that country. According to one report, some 60 percent of customers paid by fingerprint or by taking a selfie during Singles’ Day. India-based Paytm, meanwhile, has started working on a facial recognition tool to enable digital payments.

#8: Via PayPal

The 2018 holiday shopping season has been more than kind so far to PayPal. For the first time in the company’s history, mobile payment volume topped $1 billion, and did so on both Black Friday (Nov. 23) and Cyber Monday (Nov. 26). On Black Friday specifically, mobile payment volumes exceeded that of Cyber Monday, though Cyber Monday still had a higher total payment volume. Black Friday mobile payment volume increased 42 percent year over year. And that’s not all. Braintree, acquired five years ago by PayPal, recently announced that it had processed more than $500 billion worth of transactions since then. It was only three years ago that Braintree achieved $50 billion in payments volume.

#9: With a Sense of Enjoyment

Let’s be honest: Until recently, payment was mundane, not fun. No one likes handing over hard-earned money to other people, not really, no matter the purchase. But that’s changing in this era of mobile and digital commerce. That’s because connected devices can make purchasing experiences more enjoyable for the consumer — assuming the user interface is not counter-intuitive and designers and merchants put serious thought into the customer experience. There was an increase of more than 13 percent in the number of consumers who told PYMNTS that they used connected devices to pay for things because they enjoyed them, growing from 47 percent last year to 60 percent.

#10: With Contactless Cards

It’s alright to be skeptical about contactless card adoption in the U.S., given the years of promise that regularly fell short of reality. But this year brought proclamations from Visa and others that U.S. consumers are finally ready to take up contactless transactions. Lower costs of card issuance, increasing consumer demand and speed are among the factors behind that. In fact, PYMNTS found that 26 percent of consumers expressed interest in using contactless cards at physical stores. Of those consumers, 84 percent see grocery as the predominant use case.

#11: Without Cash

Make no mistake: People are indeed moving away from coins and bills, and doing so rapidly. A big part of the reason is the increase in digital and web connections — 36 percent of consumers own six or more connected devices, which is hardly an optimistic data point for cash, not when there are so many other relatively easy and seamless ways to pay via mobile and the web. Those connections also mean that merchants and payment services providers keep working harder to meet consumer demand for digital payments (and, more often, not just payments, but also payment experiences, something cash cannot offer). Indeed, consumers are eager to move away from cash, with 77 percent of them wanting to use contactless payments at gas stations. Digital payments continue to make inroads everywhere. More than half of consumers used connected devices to make a purchase in seven of the 13 categories queried: 28 percent said they bought clothing and accessories, and 20 percent said they bought groceries. Sure, consumers do carry cash: Half of them carry between $10 and $15 in their wallets. But that cash is largely reserved for tipping — 39 percent of consumers said that — and purchases from smaller merchants that do not accept cards. But with the increasing deployment of relatively low-cost, low-hassle point-of-sale systems for even the tiniest of merchants, that doesn’t seem to promise a bright future for cash, either.

#12: With Growing Caution

No one has to tell PYMNYTS readers that consumers — and lawmakers and regulators and the media — are paying a lot more attention to online security and privacy, and that it’s almost certain that 2019 will bring more efforts to craft more laws to address those problems. When it comes to how people pay, 79 percent of consumers expressed concerns over data security when using connected devices to enable payment, an increase of 11 percentage points. Almost as many, 78 percent, expressed concerns over the privacy of their data. That means merchants, financial institutions and payment services providers who can address those concerns while also offering relatively friction-free transactions will gain an edge.

The coming year will bring new entrants to this list — new trends and experiments. But these dozen ways to pay provide a strong look at what’s in store for 2019.

Source: https://www.pymnts.com/news/payment-methods/2018/consumer-trends-mobile-voice-biometrics-cash/

 


As Mobile Checkout Evolves, Companies Like Scandit Find A Place in Payments

7-Eleven Inc. is among the latest retailers to empower consumers to become their own point-of-sale checkout when they use an app on their smart phones.

A central component of that capability is the image-capture tool built into the app. The 7-Eleven Scan & Pay service, which is in tests now and is expected to have greater availability in 2019, relies on Scandit AG image-capture technology to accurately scan a product bar code.

The Scandit algorithm first determines there is an object in the smart phone’s camera view, then it identifies the barcode, Samuel Mueller, chief executive and cofounder, tells Digital Transactions News. The barcode is decoded and converted into a universal product code. That information is sent to the merchant’s backend system for identification and pricing information, which is then rendered on the device, he says. The process happens in milliseconds.

Scandit’s role in payment is its ability to capture the product information via an image. Zurich-based Scandit does not provide the actual transaction function. Instead, most clients use existing payments partners, Mueller says.

The technology will only become more vital as more retailers adopt similar self-checkout services, Mueller says. “If you think about some of the big trends and visible projects in the market, one of the things that comes to mind is AmazonGo,” Mueller says. Amazon.com Inc.’s AmazonGo convenience stores use sensors and cameras to determine which items a shopper picks up and leaves the store with. The payment is made using the consumer’s Amazon payment credentials.

While AmazonGo is limited to a handful of store locations and to consumers with Amazon accounts, and also carries a high cost to duplicate, apps that focus on the consumer stand a better chance for retailer adoption, Mueller says. The trend to enable consumers to check out on their own phones has much broader appeal, he says. That also means self-checkout is available to more store types, too.

“What’s generally the case across these solutions is the shopping happens at the consumer’s own pace,” Mueller says. It also is much more personal, given the consumer may have started the shopping process with a map search or product search prior to visiting the store.

Some retailers may even adopt augmented-reality shopping, he suggests. In this scenario, once a shopper activates a retailer app and points the phone’s camera at products in a store, she could see pricing and product information and filter for size and other attributes. This will result in technology that can seamlessly blend the physical and digital shopping realms, Mueller says.

Others are trying to combine the two shopping environments. Earlier this week, MasterCard Incsaid it was working with Next Retail Concepts on a 3-D shoppable online experience.

Source: http://www.digitaltransactions.net/as-mobile-checkout-evolves-companies-like-scandit-find-a-place-in-payments/

POS Terminal? What’s That?

Cloud connectivity, apps, and features beyond payments are shaping the next evolution of the point-of-sale terminal.

With all the discussion surrounding merchant adoption of point-of-sale systems and integrated payments, one might think the days of the conventional POS terminal are numbered. Their days as an isolated piece of equipment with a sole function as the entry point for payment transactions may be dwindling. But, that does not mean the venerable POS terminal is about to become an historical artifact, as long as it’s not in isolation.

“Any system today, whether it’s a point-of-sale or hardware device, that is not cloud-based is dying,” proclaims Jared Drieling, senior director of business intelligence at The Strawhecker Group, an Omaha, Neb.-based payments advisory firm.

Today, a conventional POS terminal may still sit on the countertop, but with increasing likelihood it’s connected to POS software. It still captures payment data, but now it may act as the citadel, protecting the integrity of the data and sharing only the minimum information necessary with the software. The POS terminal may have a PIN pad or signature-capture capability. It may enable consumers to enter loyalty-program information or redeem offers.

In instances where there is no conventional POS terminal, a merchant likely has a tablet-based POS system in place. Since 2010, when Apple Inc. debuted its iPad and POS software developers flocked to the form factor, tablet-based POS systems have steadily gained favor among merchants.

‘Very Limited’ Growth

At first, the tablet form factor, like the smart phone before it, was innovative and attracted businesses. Then, as cloud connectivity improved, the opportunity developed to bundle other services, such as employee scheduling, inventory management, pricing, and detailed sales reports, making cloud-based POS systems the preference for many businesses, especially small businesses that now could afford them and had a need for them.

That has had a dramatic effect on the market.

Even traditional POS systems, which typically had updates performed when the maker sent a technician to install new software or hardware, are losing ground against cloud-based systems, Drieling says. Some merchants avoided these updates because they might cost thousands of dollars.

“In legacy systems [POS system makers] developed the code and would try to customize it for you,” Drieling says. “Cloud-based POS systems can be integrated with new or existing systems. It allows the developer to integrate other software into that system without having to create software to bridge the two together.”

Such developments mean that the outlook for conventional POS terminals is quickly changing. “Conventional countertop devices are going to be around for a very long time, but the growth of that category is very, very limited,” says Thad Peterson, senior analyst at Boston-based Aite Group LLC.

‘Reactionary Mode’

For sure, Square is one of many to launch so-called smart terminals, which use apps and enable easy integration to POS software. Square chief executive Jack Dorsey even heralded the new Square Terminal during a November earnings call as the replacement for “dinosaur” POS devices. The same month, payments provider North American Bancard Holdings LLC launched its own smart terminal, joining competitor Poynt Co., which debuted its device in 2014.

The common denominator in all these devices is the connectivity. That is a boon to small businesses, which had to forgo POS systems of the past because of the costs. “The most critical point to why these cloud-based systems are growing, primarily in the small and mid-size space, is they allow a lot of integration,” Drieling says.

This ability to integrate payments with software that can run other business functions is much sought-after in retail. In August, for example, payments provider Global Payments Inc. paid $700 million for AdvancedMD, developer of medical-office management software.

This all points to a very cloudy future. For the likes of Verifone Systems Inc., Ingenico Group, and Equinox Payments, which sprang from the former Hypercom Corp.’s U.S. unit, their roles as providers of traditional POS terminals will change, Peterson says.

“The challenge with the Ingenicos and Verifones of the world is they are in reactionary mode,” he says. “But they’re easily disrupted by players coming in with more flexible and lower-cost offerings.”

Going Up Market

It’s not for lack of effort on their part. San Jose, Calif.-based Verifone, which went private this fall, has been emphasizing services revenue for years and launched its Carbon line of smart terminals to better compete.

Paris-based Ingenico, too, has grown its services revenue and made changes. In April, it launched the Moby/C150 ECR that features an Android-based tablet with a 15.6-inch display.

As it adapts to changes among merchants and consumers, Ingenico finds itself examining the point of interaction between consumers and merchants. While Mark Bunney, Ingenico North America director of go-to-market strategy, says there will still be customers for standalone POS terminals, the market is changing.

“Lots of the tablet or mobile POS providers are definitely changing some of the dynamics in the market­place,” says Bunney. “We have to change not only from a hardware perspective, but [in] how it’s going to impact our software and services.”

Bunney points to Apple’s own retail stores and Amazon.com Inc.’s Amazon Go locations as examples of this change. There is no POS station in an Apple store. It’s all mobile, Bunney says. And in Amazon Go stores, the consumer’s own smart phone with the Amazon app is the payment mechanism.

Of the three primary categories of POS-terminal technology—the standalone device, the integrated POS, and mobile POS—demand for standalone devices is declining, Bunney says.

“That’s part of the market migrating to an integrated solution or going to a more tablet solution,” he says. “The other thing we’re seeing in the integrated market is merchants as well as the consumer want to have additional interaction beyond just the payment with the merchant.”

That mirrors what Peterson sees in the market. “The customer experience used to be managed by the merchant,” Peterson says. “Now, the consumer controls their own experience.”

That control has been enabled by the versatile tablet. “Now, the POS could look like a tablet,” Bunney says. It depends on the type of interaction consumers want, he says. “People want sleeker-looking solutions,” he says. “They don’t always necessarily want to have a separate payment device from the tablet.”

That’s not to say that a tablet, or cloud-based POS system, is for every type of merchant. Bunney doesn’t think large merchants would be as satisfied with a tablet-centered POS as they would be with something designed for their complex needs.

Still, some cloud-based POS system providers have made moves to go up market. Square Terminal, with its integration capability, is one example, and First Data Corp. is promoting its Clover POS system for fine dining.

Postponing Extinction

How the POS experience will adapt is uncertain, with its dependence on how consumers shop and the technology they use and how merchants react to these changes.

However it evolves, there will be integration of the payment-acceptance device into the overall checkout experience.

“The standalone device where it’s not talking to the POS is in decline,” Bunney says. Yet he doubts it will disappear completely, despite Square’s claim the older tech is a “dinosaur.” “In some areas, it may not be growing at as fast a rate,” he says. “There is still that interest level.”

The hardware side may not change too much in the near future, Bunney says, with the exception of some devices, like tablets, gaining contactless-payment acceptance. Most POS terminals shipped since at least 2015 by the likes of Verifone, Ingenico, and Equinox have contactless tech built in, if not yet activated.

Better contactless identification marks may be part of future devices, Bunney suggests. “How do you make it easier for the consumer to interact from a hardware perspective?” he asks.

POS software, in all forms, will evolve much faster, he says. Not only will industry standards from EMVCo, which sets the specifications for EMV chip-card acceptance, influence this, so will PCI Security Standards Council standards on PIN-on-mobile, which enables commercially available devices to securely accept PINs.

PIN-on-mobile is one of the trends Peterson sees influencing the evolution of the POS experience. It’s devolving the POS into smart devices that are not POS devices, he says. More use of mobile devices, especially for in-aisle checkout, and increasing awareness and availability of alternative payment methods are two other trends.

The Ultimate Payment

The so-called traditional POS makers will have to evolve, says Drieling. “They need to come out with some competitive products,” he says. “They know the POS industry very well. They probably have the capability to bring out some competitive cloud-based POS products. I don’t see them doing very much in the independent software vendor space.”

The future POS may not even resemble a POS device or tablet.

Even Amazon’s Alexa voice assistant almost qualifies as a POS device, Drieling says. Echo and other in-home devices enable consumers to use their voice to authorize orders. “The next step is unified commerce,” he says, allowing a consumer to start a transaction in one channel and go through others until making the ultimate payment.

 

Source: http://www.digitaltransactions.net/magazine_articles/pos-terminal-whats-that/