POS payment terminals: the ultimate point of contact for physical sales?
As the internet giants are moving to the offline world, payments becoming a cheap commodity and loyalty becoming a key driver for innovation, the good old payment terminal could very well become a very important point of physical contact.
The current EMV POS payments are a commodity. They are cheap, simple and are sold in packaged solutions that allow merchants to process payments. In most countries the use of cash is declining as more people pay with the PIN/EMV card and low value amounts are less of an issue. This is all very nice for the merchants but doesn’t add any real value to the sale; it is a facilitator at the end of the sales process that should without a doubt be simple and cost as little as possible. All this will fundamentally change as the new players enter the payment business and start offering (new) value to merchants.
The current terminal is in most cases a very simple device that allows one-way communication only to authorize a payment. As a point of contact however it can become a two-way method of communication that is much more intelligent and allows for interaction. The device will know who you are, where you are, which coupons you have and how you want to pay. Based on this information it will be able to make all kind of deals on a particular sale. This can be as a discount, a combined offer, a financing condition, an VAT invoice or just be the logical last step in a sales that started already somewhere on the web, lets say with e.g. the Google search. POS terminals will be Point of Contact that play a crucial part in the sales process.
As the POS terminal is the only device left that has real physical interaction with the consumer I presume that every Tom, Dick, and Harry in the payment business wants to be inside this machine, and thats why I foresee a battle for the POS terminal. Google and Groupon want to be in for the daily deals, mobile operators want to be in to extend their phone business and maybe to do mobile payments, Facebook wants to be in for the marketing and Paypal / Google wallet want to handle the payments. In the physical world every sales transaction ends at this one (1) point in the store.
An important driver for this change will also be the NFC phones. Almost all parties (banks, telecom, technology) have placed huge bets on the NFC technology. This means that if the phones are there, there must also be terminals that communicate with them. In essence that means a complete new terminal park is needed. Terminal vendors can simply add an NFC chip to their devices but could also claim ownership of the intelligent terminal.
New payments methods will make their way to the POS terminal by adding value for the merchant, but will the incumbents be able to claim their position and create new market dynamics?