Want To Win With Payment Terminals? Get Intimate.

In a sense, the ongoing battle for point-of-sale supremacy involves intimacy.

Yes, intimacy.

Maybe a diner prefers to have the waiter bring the payment terminal to the table instead of disappearing with the credit card and all of its sensitive data — still common in the United States, though the famous European habit of settling the bill at the table is making inroads here at restaurants and even some upscale bars.

Or, perhaps, a patient prefers to take care of the co-pay in the privacy of a doctor’s office instead of the receptionist’s desk. Who wants the people waiting in the lobby to overhear private health and medical payment details?

As for merchants, it is becoming increasingly clear that consumers respond well to personalization and customization — who doesn’t want that intimate attention when spending money? — so why not find value via custom payment experiences?

Providing those experiences through the terminal is among the latest developments in this vital sector of the payments and commerce world. That point was demonstrated earlier this week when Square launched a product called — simply enough — Square Terminal. It is designed so that merchants and service providers can ring up sales, accept all forms of payment and print receipts from one device.

POS Glory Days

“Payment terminals are everywhere, from liquor stores to dry cleaners to dentists, and with Square Terminal, we can now serve these sellers better with new, elegant hardware on top of Square’s fair and secure payments service,” said Jesse Dorogusker, head of hardware at Square. “Square Terminal is designed from the ground up to ensure a feeling of familiarity, so sellers and their customers can use it right away.

The Wi-Fi-enabled payment terminal has a battery meant to last all day, supporting the goal of having users hand over the device to customers when making payments at various locations in the store instead of potentially waiting in line (during which, of course, consumers have more time to think about whether they really want to make the purchase). Such a trait stands as an example of those ideals of intimacy and convenience that drive so much retail development these days – whether online, via mobile devices, inside stores or some combination of all those channels.

Square Terminal may represent a newer use case for POS, given its portability, but the product is not the company’s first attempt to take aim at legacy terminal technology. Square Register, introduced about a year ago, is targeted at larger merchants, with a built-in seller display and detachable customer display. The terminal also offers dedicated hardware, embedded POS software and Square’s payments technology.

For the new Square Terminal, meanwhile, the use cases described above are at least roughly similar to what Dorogusker reportedly envisions for his company’s newest product — in fact, the company tested some of those situations when pushing Square Terminal toward its official launch, he told a reporter this week.

Fresh Tech

Square is hardly the only payment services provider that is adding fresh technology to the POS world.

Many of those product launches and technological developments are fueled not only by consumers’ shifting shopping habits, but also by the need for small and tiny merchants to have reliable, affordable ways to process payments from a variety of methods, from cash to cards to mobile wallets. As well, those providers are trying to win business by making it possible for merchants and other operations to avoid the hassles of upgrades by doing more of that for them, and to, in the view of Dorogusker, free them from “onerous contracts” tied to terminals.

Stripe also provides evidence of how the POS competition is evolving along those lines. Its recently launched product — called Stripe Terminal, another instance of utilitarian concision — enables online businesses and platforms to accept in-person payments with Stripe. The terminal is designed so that developers can build custom payment experiences for in-person transactions in the same way they have been doing for online merchants.

The terminal also was designed to get merchants past this common and frustrating problem: Employing a mix of in-house and third-party payment services providers, cobbling together point-of-sale hardware and software, dealing with security and EMV certification processes and navigating regulations and hardware requirements that varied by country.

A close cousin of intimacy is simplicity — if intimacy were typically complex, the result could be confusion and alienation more often than comfort, after all. That’s one of the pitches, whether directly stated or not, of many of these new terminals hitting the global market. “The question is: Can we make the offline world as simple as the online world?” said John Collison, co-founder and president of Stripe.

Other POS Players

First Data, too, is involved in this competition, and its recent POS growth provides reason for company rivals to worry. Clover, the firm’s point-of-sale operation focused on the SMB market, has been processing in excess of $65 billion in transaction volume on a global basis, up 50 percent year over year, according to First Data’s most recent financial results.

And Verifone, which went private earlier this year, is trying to gain more of the POS market. This year, it has reported double-digit growth and what a company executive called “robust demand” for its mPOS operations, along with other associated gains — and come on top of last year’s “terminal surge” in India, which also benefited the company.

Payment Terminal Growth

The POS market continues to experience robust growth. A payment terminal report issued in July said that the global installed base of point-of-sale terminals grew to almost 109 million units in 2017. Market growth is “primarily fueled by the increasing adoption of electronic payments in emerging markets. Developed markets are relatively saturated in terms of POS terminal adoption,” the report said.

The POS Terminals and Wireless M2M — 3rd Edition also found that cellular connectivity was in 38 percent of the devices shipped in 2017, with the technology playing an important role in the global adoption of electronic payments. In fact, the installed base of cellular POS terminals reached 37.7 million in 2017.

With that in mind, the report forecasts a compound annual growth rate (CAGR) of 10.1 percent between 2017 and 2022, for a total of 61 million cellular POS terminals at the end of the forecast period. The mobile point-of-sale market is growing faster than sales for more traditional terminals. That said, many merchants and other organizations have to activate the contactless features of their terminals.

Legacy POS and the Future

Even with such laggards, the time is right for legacy POS terminals to go the way of phone booths. That was the general message expressed in a recent PYMNTS interview with Rich Aberman, co-founder of WePay, an integrated payments provider.

He said that terminal and payments services providers are now designing products around the certainty of an uncertain future – and making sure to layer in enough “agility and flexibility” so that the products are designed to adapt toward things the designers can’t see. That represents a significant change from the thinking that held sway as recently as a decade ago.

And that thinking also places an emphasis on integration and simplicity, as opposed to the old ways of doing things in the POS world, which resulted in what he called “Frankenstein configurations made up of the hardware, the software and the core payment functions – and all of those things were decoupled.”

Still, a big question seems to hang over this ongoing, and evolving, payment terminal competition. What happens when all these new devices do manage to create a more intimate user and merchant experience? What comes next? A larger trend in payments and commerce is the construction of an apps ecosystem that allows merchants and others users to build on top of it. Will that take a big hold in the POS world?

For now, though, expect more products similar to what Square and Stripe have recently debuted, and more focus on using payment terminals to not only make life easier for merchants, but to increasingly interact with consumers on their terms.

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