Semi-integrated versus integrated POS solutions, that is the question. Well, one of many that merchants are trying to get answered. Bill Lodes, SVP at First American Payment Systems joined PYMNTS for a discussion about why a semi-integrated approach provides a fully functional POS solution to merchants without a lot of the hassles.
With the ability to use advancing technologies to shop and make purchases like never before, today’s consumers have come to expect convenience. One of the most critical and influential places where merchants can make this happen for consumers shopping in-store is right at the point of sale.
But there are many challenges that face merchants, along with their software vendors, when it comes to ensuring that payment terminals are keeping up with the payment technologies consumers will flock to next. Along with supporting more secure payments via EMV integrations and preparing the acceptance of payment advanced technologies on the horizon, First American Payment Systems SVP Business Development & Strategy Bill Lodes emphasized the importance of continuing to bring value to POS devices as well.
Below is an excerpt of our conversation with Lodes about the barriers merchants and ISVs must overcome and the benefits waiting for them on the other side.
PYMNTS: Companies are still working out the kinks on EMV and how it affects their business. What are the challenges for businesses today with EMV and EMV deployment?
BL: There is still a lot of talk in the market related to EMV and many businesses don’t know where to start. The latest reports and statistics show that there are only 750,000 EMV-enabled terminals in the U.S. marketplace, representing roughly 18 to 20 percent penetration. There are many businesses today that don’t truly understand EMV, and need help gaining a perspective of what they need to do not only from an EMV perspective, but also from the perspective of security and compliance.
Challenges that businesses must address relate to the integration of EMV in their current payments technology, security related to EMV and the compliance that comes with it. Many businesses are now seeing chargebacks because they are not EMV compliant. This will be an ongoing trend until they have a solution in place.
So it comes down to – what does the business need to do to deploy EMV? Do they need a new terminal? Or do they need an integrated or semi-integrated solution in place for their POS system?
PYMNTS: What benefits are there for all three (merchants, ISVs and consumers) in providing EMV solutions with semi-integrated functionality?
BL: The semi-integrated approach is shown to require less development, a reduced PCI scope and a quicker time to market, and there are many benefits that can help merchants, ISVs and consumers.
First of all, for the partner or ISV, a semi-integrated EMV approach avoids going through a full certification of their own. This saves the partner money, development time and allows for a quick deployment to the market. The merchant or business benefits with an integrated approach is that it also works with their existing software. By setting up an EMV capable terminal, they are ready to accept EMV transactions because their ISV or VAR has done the heavy lifting for them. In addition, their chargebacks due to card-present fraud should decrease. The customer will benefit by having the peace of mind that the business takes security seriously and has taken the step to decrease fraudulent transactions.
All that said, semi-integrated solutions allow EMV implementation to happen much quicker at less cost, greatly benefiting each of these groups.
PYMNTS: Merchants across many different verticals are moving from traditional POS terminals to tablet/mobile POS devices for a more streamlined business operation. What are the advantages to this type of POS and how does EMV work with these types of POS units?
BL: There is definitely a trend for businesses in specific verticals to move to a tablet/mobile-based point of sale. There are many advantages of tablet/mobile POS devices in that they are more powerful than a terminal – offering more cloud-based reporting and analytic capabilities, inventory, time keeping, loyalty programs and multiple payment options.
I see a huge advantage for partners and merchants that use this technology as a way to differentiate themselves, scale business operations and offer various payment options across multiple locations in a cost-effective way. EMV certainly works well with tablet POS options, whether it is fully integrated or semi-integrated.
PYMNTS: What can ISVs do to not only add more value to the POS device, but to the business itself, such as additional payment options, security solutions or customer acquisition programs?
BL: ISVs have a huge opportunity to differentiate themselves and their customers with enhancements to their POS software and devices. The partners we work with are looking to provide value in different verticals through the POS whether it is in dental, health care, membership groups or nonprofits. In addition to the basic payment functionality built into the software, additional features such as NFC payment acceptance for Apple Pay, Samsung Pay and Chase Pay are also valued heavily. ISVs should also be incorporating loyalty and rewards programs for their merchants to allow for customer acquisition and repeat business, which will boost revenue and provide a differentiating factor in the marketplace.
The largest focus for partners is payment security. Security is a very important topic. In addition to EMV, ISVs should be incorporating several other security products such as tokenization and end-to-end encryption, which help decrease fraud for card-present transactions and has shown to be a valued solution for many merchants. It’s also imperative that ISVs ensure they are PCI compliant. Guidelines change every year, so it is important to keep up.
At the end of the day, ISVs need a robust set of payment security solutions to minimize any security risks. A combination of many security products is the best method to protect ISVs and their customers.
PYMNTS: To follow that and looking ahead, where do you see the POS terminal in five years? Will technology advancements in beacons, VR and payments types have a big impact on the POS itself?
BL: I believe we will continue to see an evolution of POS systems to be more flexible and have robust customer-focused features that leverage NFC technology, beacons that deliver personalized messages and offers, and the ability to accept an expanded set of payment types heavily based on mobile.
Customers today do everything on their phone – they want to see offers there customized to what they shop for, they want discounts, loyalty and rewards and the ability to pay that way as well. So really, I see POS hardware and software becoming highly responsive to the end customers and their needs and wants. The customer will drive that evolution.
If customers want to pay with mobile, wearables or via virtual reality, there will come a day where they have all of those options at the point of sale. By leveraging mobile and tablet POS technology, we can continue to meet the needs of not only the customer, but the business as well.