Before 2009, when Square launched in the U.S., the world of payments wasn’t terribly friendly terrain for small and micro-businesses looking to accept credit cards. The process was convoluted, and the outcome was generally expensive for the merchant.
That, as myPOS Executive Director of Strategy Irfan Rasmally told Karen Webster in a recent conversation, was actually a good outcome. A bad outcome was when a merchant couldn't gain access to digital payments at all.
“This used to be mostly controlled by the banks, who have been mainly interested in targeting the biggest player," he noted. "They would concentrate on the thousand or so clients that could bring in tens of millions in revenue each month.”
The problem, Rasmally noted, is that in the European Union (EU) market that myPOS serves, much like the U.S., the vast majority of companies are small businesses and micro-businesses. They can neither take on the serious set of expenses that come along with bank terminals nor the cash flow hit that comes with having to wait for their funds to settle.
In 2009, however, with the launch of Square (as well as PayPal, Payleven and a host of other mobile point-of-sale (mPOS) startups that entered the market in the subsequent years), something different happened.
“This was a real eye opener that there could be a cheaper, lighter alternative to banking terminals,” Rasmally said, noting that the sudden proliferation of “payments dongles” opened up much potential for the future of underserved small merchants worldwide.
This also came with many potential problems, particularly around security and plugging in payments via a smartphone or tablet. That is why myPOS went in a slightly different direction when it launched in 2014, offering what it called a miniPOS product. Its stand-alone light terminal is meant to combine the portability and flexibility of the first generation of mPOS offerings, while “bringing along the comfort and security of working with a single piece of hardware.”
That's because, Rasmally said, though the first round of mPOS offerings opened a door to a new way of doing things in digital payments, pushing that door open wide enough to usher in a fuller range of mobile offerings required some rethinking of that initial concept.
Securing And Scaling
One of the greater advantages of entering into the market a few years into the mPOS boom, Rasmally noted, was the opportunity to learn from the mistakes and struggles others experienced early on, particularly around security and interoperability.
Security, Webster noted, was an early hurdle for Square, especially around not encrypting data and making it so easy to create a merchant account that fraudsters were able to fake storefronts. Watching those struggles play out, Rasmally said, is why myPOS initially rejected the dongle and smartphone/tablet model.
Instead, it opted for a small, stand-alone terminal device optimized to take chip and PIN payments, as well as contactless mobile and card transactions. In addition to being light and portable, the device is Bluetooth- and wireless-enabled, so it can transmit data — but it doesn’t put a business in the position of running its corporate operations on the same device it uses to check Facebook.
“Depending on the environment you are in, and the sophistication of hackers who want access to your personal data, there is too much opportunity to get in,” Rasmally said.
He further noted that the myPOS hardware solution was built primarily around security concerns, and is fully PCI DSS and EMV-2 compliant, meaning that all data that runs through the miniPOS is encrypted, both when it is transmitted and stored.
The focus on security is important in its own right, he said, but also because it feeds the firm’s other goal. The miniPOS launched as a device that worked throughout the European Economic Area (EEA), which Rasmally admitted was a rather sizable bite to take.
“The U.S. economy is itself a lot, but it has the advantage of being a single nation where everyone speaks English," he said. "We are building a product for different languages, different cultures, different payment cultures and acceptance cultures."
The high level of focus on compliance and security makes it possible for myPOS to passport its services throughout the EEA so it can “cohabitate across countries.”
Moreover, Rasmally added, because of the relatively low levels of fraud it experiences (due to that full compliance), it is able to offer instant settlements to merchants. That marks a massive improvement over the days, and even weeks, that small merchants must typically wait to access their card payment funds when working with bank terminals.
“This is especially true for small businesses where cash flow is such a critical issue,” Rasmally said.
As mPOS solutions solve critical issues like security, interoperability and speed, he said, myPOS can move on to provide in line with its real potential, helping smaller — and even micro — merchants build better retail experiences for their consumers.
The Wider World Of Services
Merchants are using mPOS solutions to access card payments, but a brief glance at the PYMNTS mPOS Tracker indicates that they are thinking outside the box when it comes to what can be built on or around a payment process. For example, among retailers that are adopting mPOS solutions, 87 percent are leveraging them to offer “checkout anywhere” capabilities in the physical store.
“And that makes sense, particularly as retailers are wanting [even] more to personalize their in-store experience," Rasmally remarked. "Checkout is a great place, [as well as] saving the customers from having to walk up and line up at a point of sale, when they can maybe check out with the one or two items they have where they are and be on their way. This is very trendy now in Europe, and is changing the entire landscape of how card payments at the cash register are moving in Europe.”
Increasingly, he noted, the trend in small firms adopting POS is moving toward that kind of thinking, starting with the payment and looking at whatever services can be connected or wrapped around that capability. To facilitate that, myPOS offers merchant partners access to an app marketplace — myPOS App Market — so they can build those service packages around their POS terminals.
What myPOS tends to see from its partners, he noted, is interest in back-office capabilities, particularly connected to digital invoicing. Developing gift cards is also popular on the front end, as is the ability to develop and push loyalty offerings to customers.
The options are many, and exist in many combinations. Different merchants, he noted, will favor various arrangements, depending on their customers' needs. However, finding that right arrangement starts with the payment, Rasmally stated, and making sure the 15 million or so small businesses that have been traditionally locked out of taking card and digital payments won’t just have access to them, but will be able to use them to make better offers to their customers.
“There is a change in the world today," Rasmally said. "Today, when you are in Europe or the States, not everyone is carrying cash. And if you have to leave a merchant to go find an ATM, how many times do you return back? We think this is really what the future of client retention is going to be about.”