Preparing Your Business for a New World of Payments in 2014 and Beyond
- Apr 28, 2014
Over the past 20 years, U.S. retailers shifted away from checks and started accepting credit cards. Most stores still have cash registers or use desktop PCs as point-of-sale terminals, but many experts believe that this will change in the years to come. Mobile payments, self-checkout systems and tablet computers have begun to replace and/or extend standard POS equipment opening up new challenges and opportunities for businesses.
Mobile payments enables individuals to pay for retail goods with their smartphones instead of traditional plastic cards. The mobile payment applications come in primarily two forms. Some digital, or mobile wallets, link directed to a bank account, while others rely on card emulation, which uses traditional card rails for the purchase by entering the card number into the application. Research firms like Forrester, ABI and Juniper predict that these services will grow rapidly between 2012 and 2017, according to TechCrunch. In fact, shoppers may eventually expect most stores to accept mobile payments as well as credit and debit cards.
Retailers have also started using new kinds of checkout equipment. Tablet computers and sophisticated smartphones can replace some of the cash registers in a store or even serve as the stand-alone point of sale (POS) system for small businesses. Larger retailers appreciate the compact size, versatility and portability of these ‘mobile’ systems. And, affordability make them appealing to businesses of all sizes.
Self-checkout systems are also gaining popularity among retailers. Major companies like Wal-Mart and J.C. Penney have added them as have several discount, department and grocery stores. These systems allow customers to buy most items without any employee assistance. Some self-checkout terminals can even process coupons by scanning barcodes. At this time self-checkout is geared towards larger retailers, but new mobile applications and continued consumer adoption (and demand) for mobile payments and an overall more convenient experience, will likely drive down costs and open up the possibilities for all business owners.
These new payment and point-of-sale systems offer many exciting benefits. They satisfy customers by accelerating the checkout process. Shoppers don't have to sign receipts or show ID cards to a cashier. Fast checkouts help supermarkets, pharmacies and discount retailers compete with convenience stores.
Both mobile payments and portable POS terminals allow companies to reduce the size of their checkout equipment. For example, tablet computers take up far less space than cash registers. This enables retailers to carry more products or add extra seating. Space efficiency is particularly important for very small shops.
Compact point-of-sale technology is also affordable. A new cash register costs about $2,500 more than a POS-equipped iPad, according to DailyFinance. Self-checkout systems remain rather expensive, but they dramatically reduce labor costs.
Mobile sales incur lower processing fees as well. Major cellphone payment services charge 0.25 to 0.3 percent less than credit card companies, according to The Washington Post. This may not seem like much, but it can add up to hundreds or thousands of dollars in a year. Less costly equipment and lower fees help retailers maintain low prices.
How to Prepare
It's important for shops and restaurants to get ready for the upcoming payment revolution. If a retailer still uses price stickers at the checkout counter, now is the time to start scanning barcodes. Stores can even add them to price tags on used merchandise. It is difficult and time-consuming for cashiers to manually enter prices on a touch screen or smartphone. Furthermore, this pricing upgrade makes it possible for a store to use self-checkout technology in the future.
When a company is ready to use the latest checkout technology or accept new types of payments, it is vital to fully examine all of the options. Stores serve more customers when they have payment systems that process both debit and credit sales. Fewer people may initially use a mobile payment service if it expects them to install a new app. It proves important to research the security features and reliability of different services as well. Businesses shouldn't only compare the capabilities of modern POS terminals; this equipment also needs to be durable.
To make a smooth transition to new technology, employees must be thoroughly trained before they begin serving customers. This will prevent lost sales and embarrassing errors. Businesses should not overlook the goal of satisfying as many customers as possible. Greater convenience for cellphone users mustn't come at the expense of shoppers who prefer to pay with cards or cash. As always, retailers need to find an acceptable balance between the old and the new.
It’s an exciting time for retail and the payments ecosystem as a whole. Retailers who want to get ahead should start now by investigating and deploying new strategies and systems based on mobile technologies, business management efficiencies and improving overall customer engagement.