FIS Bets On Digital Wallets To Change The POS Experience

For many of us, the past year has been something akin to a “digital immersion class”— and it’s been mandatory, not elective.

In a Masterclass with Karen Webster, Dan Brames, executive vice president, head of North America merchant, FIS, said that the point-of-sale experience is changing, moving toward a hybrid of physical store shopping with a full complement of digital offerings. And that’s opening the doors for digital wallets.

It’s been widely discussed that the pandemic has accelerated the transition to online channels to get things done. That’s particularly true of mobile wallets — and particularly in-store at the point of sale. Pre-COVID, digital wallets struggled, as there was a range of payment options. It seems a million years ago (but it was only 2019!) that people weren’t worried about touching terminals. But the move to mobile wallets certainly has increased. Roughly two-thirds of bridge millennials (33 to 43 years old) are connected with their digital, mobile devices and have used them to make purchases in-store.

It might be difficult to precisely locate the tipping point, but as Brames noted, findings in The Global Payments Report this year suggest mobile wallets may make up roughly 41 percent of transactions by 2024. Countries like the U.S. are starting to catch up with, say, the U.K., where contactless has been around for a relatively longer period of time. “People just don’t want to touch the point of sale,” he told Webster, “and they don’t want to enter their details manually.”

To that end, the mobile wallet and the connected device have become the channels for ordering and payment, regardless of where fulfillment happens.

The challenge, said Brames, is to ensure that retailers offer a seamless, frictionless experience all the way through — regardless of whether the customer orders online and picks up at the retailer or makes a purchase at the point of sale. If that continuum is the consumer’s preference, merchants must think differently about what it means to check out at the point of sale, and indeed must reconsider the very concept of the POS itself, said Brames.

“The point of sale is no longer just that terminal or that POS device in the lane. It’s obviously online, it’s mobile, it’s ‘all of the above,’” said Brames. There will be no going back to the way things were in the pre-COVID days. Choice within digital payments will be key, he said. That’s reflected in PYMNTS’ data, which found that 60 percent of consumers want “digital choice” at the merchants they frequent. In fact, they’ll vote with their feet if that choice isn’t on offer — ranging from the “Pays,” such as Apple and Google and Samsung Pay, to buy now, pay later (BNPL) choices.

Brames said that simply having signage on hand denoting that range of payment options can keep customers on-site and shopping. But FIS has found it necessary to help educate merchants on deciding whether BNPL can be an important offering — and how they can add that capability. That type of education is best served by a processing partner such as FIS, he said.

“They’re coming to us proactively asking how they can accommodate some of the needs they saw during COVID and the holiday shopping season,” said Brames.

Real-Time Payments

Brames noted that the digital pivot could also benefit merchants, as real-time payments offer a framework for firms to resolve late payments and cash flow issues.

“We’ve heard from a lot of our customers that some of the things they want to speed up include paying their vendors at the time when they’re due. In other words, waiting until the last minute, but then being able to send that payment instantly and not have to worry about any friction in the payment.” That will let restaurants and retailers purchase inventory just in time, thus reducing operating inefficiencies.

It’s important to resolve the gap between the online experience and the point-of-sale experience, said Brames, especially for smaller merchants. For example, a customer may not be able to use a mobile wallet in-store.

“In some cases, it’s a question of the physical location catching up with the online experience, or some merchants needing to catch up in general,” he said. And looking ahead, the keyword for 2021 is recovery.

“There’s a high need to generate foot traffic and generate cash flow,” noted Brames, “and those are going to be paramount concerns for the next couple of quarters in 2021.”