Why Big Retail Looks To SMB For How To Innovate

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As the POS terminals evolve with the coming of feature-rich new payment devices, small businesses are gravitating toward adopting them, including cloud-based tablet solutions that crowd the marketplace. In a recent podcast interview, MPD CEO Karen Webster caught up with PayAnywhere CEO Marc Gardner to discuss how SMBs can manage inventory, analyze costs, and engage with their customers using a free, easy hardware and software solution.

EMPOWERING TODAY’S SMALL BUSINESSES

Founded in 2010, PayAnywhere’s cloud-based “pay-as-you-go” mobile app payment system aims to help give SMBs a fighting chance as they compete with their larger counterparts. In fact, SMBs already seem to have the upper hand in other ways, according to Gardner.

Today, the overall state of small business is much better positioned than it has been historically, he said.

“Small business spending is up, overall consumer spending is up, and the real power point that SMBs have is that they’re hyper-local,” said Gardner. SMBs serve their customers on a different knowledge base, he added – they really know their customers well, whereas the bigger ecommerce players like Amazon are having a hard time doing things at the local level.

“I think the opportunity to have SMBs with salespeople or store owners who actually know their shoppers’ likes and dislikes will allow them to be around for a long time,” said Gardner.

TABLETS VS. TRADITIONAL CARD TERMINALS

As POS technology evolves, SMBs are increasingly looking to get their hands on tablet-based solutions that give them opportunities to do much more than just accept cards.

Gardner related what’s happening in payments with rapidly evolving POS technology to the coming of cell phones back in the day. When cell phones were finally offered for free with service agreements, the amount of cell phone-holding consumers became prolific, he said. People then talked about the demise of landlines.

“I see a similar analogy in the payments space, with credit card devices disappearing over time,” said Gardner. “And the reason the cloud-based tablet POS acceptance will continue to accelerate is because it’s just a better solution, no different than the color TV was to the black and white TV, or the plasma TV was to the color TV.”

With tablet solutions, he added, there’s just so much more computing power compared to traditional countertop credit card POS terminals. There are also better displays – merchants can see what’s selling best at what time of day, which stores are doing best, what sales are influenced by weather patterns, and more. They can also see which customers have historically purchased which items – something that just can’t be done with display limiting traditional terminals, he said.

HOW PAYANYWHERE STOREFRONT DIFFERS FROM THE REST

PayAnywhere Storefront, launched in April, is one such tablet-based solution that allows merchants to do much more than just accept payments. But, as Webster noted, the marketplace is very crowded – there are lots of other solutions out there that SMBs can choose from.

“What makes Storefront different today is that we are the only free hardware and software solution in the marketplace,” said Gardner. “The only way we generate revenue is from payments.”

Gardner explained that a big group of their competitors have an $80-100 software subscription fee – and merchants have to go out and buy the hardware, the tablet, the stand, the card reader, and everything else. With PayAnywhere Storefront, there’s no charge for the cloud-based software or hardware, just the processing.

In the discussion, Webster brought up the point that “there’s no such thing as a free lunch,” asking whether or not the company monetizes from other things that the platform enables, such as suggestive selling or data around campaigns and offers. Right now, however, Gardner explained that PayAnywhere is only profiting off of merchant services.

“Right now, we are looking for scale, grabbing as much of the marketplace as we can,” said Gardner. “I do agree – nothing’s free forever. But right now, there’s no charge for anything besides processing.”

HOW EMV COMES INTO PLAY

EMV is obviously a hot topic for many reasons, as most are aware of the data breaches and the coming liability shift in October 2015. There’s a school of thought that indicates that some segments will do the math and decide that EMV isn’t something that makes sense for them, said Webster, and instead will fast-forward to mobile payments.

When it comes to SMBs, Gardner believes that they’re getting greater visibility of EMV, and the card associations are doing a good job with their PR campaigns to boost this visibility. That, he said, is “softening the sales cycle to create demand among merchants.”

But for PayAnywhere, EMV is being leveraged to further escalate their sales initiatives, he said. Part of their sales plan is to offer merchants a free EMV solution or upgrade in effort to obtain the merchants’ services.

“One of the opportunities for us, since we’re not public and do not have to adhere to strict financial forecasts and budgets in the public markets, is that we can move at an aggressive level and invest in the future by grabbing this market share and upgrading merchants,” said Gardner.

But readying for EMV is much more challenging for other merchants, like, for example, a vending machine that dispenses Coca Cola. Upgrading and changing out all vending machines to accept EMV is a much bigger initiative. So for these types of merchants, said Gardner, the adoption will be slow. Merchants with higher card fraud, however, will be the ones to change much quicker.

HOW SMBS IGNITE THE EVOLUTION OF PAYMENTS TECHNOLOGY

SMBs clearly have an advantage when it comes to personalization – to truly knowing their customers. But they also have an advantage when it comes to testing out new POS technology – they can move more quickly because they are small, and can try new things without worrying about complications with internal bureaucracy.

Some of the larger, more well-financed e-commerce solution providers like Amazon with its one-click purchase have innovated much faster than the small businesses that don’t have a technology team or person, said Gardner. However, where he believes SMBs are more nimble is in their ability to adopt solutions like PayAnywhere Storefront, which will allow a rollout to a single store or small chain rather than throughout the nation, which takes a lot more organizational and intensive structure.

“I think that SMBs historically are quick to make a decision, and can move from a credit card POS device to a tablet-based solution very quickly,” said Gardner. “We’ve seen our growth accelerating excessively fast within our tablet cloud-based POS solution Storefront.”

So SMBs, Webster said, don’t create innovation, but they can quickly deploy it, and by doing so they can create new opportunities for innovation to flourish. It’s a testing ground for what people develop outside of the SMB environment.

“I think the key element is the adoption phase. What SMBs want is to take processes that are very complex, and simplify them,” said Gardner. “One of our upcoming rollouts takes the complexities out of inventory. How, for example, do merchants look at shrinkage – lost or stolen services or products from a store? We can really simplify that.”

Merchants, added Gardner, don’t need an instruction manual, tutorial or an online wizard to implement and use the PayAnywhere solution.

“How many people actually read the instruction manual for their smartphone? That’s what our goal is – to make every single line of code that simple,” he said.

Marc Gardner
CEO, PayAnywhere

Marc Gardner is founder, president, and CEO of North American Bancard, a multi-faceted payment solutions provider dedicated to delivering the latest payments technology with the highest level of customer service. Headquartered in Troy, Michigan, North American Bancard ranks as one of the industry’s top 30 acquirers; an achievement due in large part to Marc’s commitment and vision. North American Bancard was also named 2014 ISO of the Year at the Electronic Transactions Association (ETA) Star Awards.

Through Marc’s driving force and determination, one small office grew into an established ISO that processed over $15 billion in 2013. Marc now employs over 900 people at his corporate office and other locations with an additional 3,000 plus independent agents located across the country.  Today, North American Bancard continues to expand both organically and through strategic acquisitions.

Under Marc’s leadership, in 2010 NAB launched PayAnywhere, a mobile point of sale solution designed for businesses of any size. PayAnywhere was born from Marc’s vision of harnessing the computing power and mobility of smartphones and tablets to mobilize the point of sale. Leveraging the considerable payments industry resources of NAB, Marc brought PayAnywhere to market with its free mobile credit card reader and highly regarded iPhone app. Executing against Marc’s vision, the company has since added support for the most popular smartphones and tablets and expanded its merchant-centric feature set to establish PayAnywhere as the mobile POS solution of choice for businesses of all sizes. PayAnywhere continues to usher NAB into the mobile frontier as a leader in the disruption of the traditional point of sale experience, maintaining the striking growth momentum that NAB is well known for.

To listen to the full podcast, click here.