Features, Functionality and Price
One of the hottest technologies that many retailers are considering to improve their operations and make it easier to accept credit and debit cards involves mobile payments. The ability to accept a card on a mobile device that doesn’t have to be connected to a nearby phone line has a lot of appeal, and not just to service providers like repairmen and limo or taxi services that can’t connect a card-accepting device to traditional landlines. It also has a lot of draw for retailers that want to add an extra payment device to handle sales or promotions, or to retailers selling their goods outdoors or at special events.
Even some traditional bricks-and-mortar retailers are looking at mobile options as their primary card-accepting device. For these retailers, the low cost of purchasing devices like those offered by Square and other technology companies has a lot of appeal.
One payments processor thinks these retailers need to be cautious. Jared Isaacman, CEO of Harbortouch, a processor and provider of point-of-sale systems that handles more than $9 billion in payments for some 110,000 merchants nationally, believes that some small retailers may be taking the mobile technology too far.
He agrees that such systems work well for merchants that truly need mobile capabilities. But other retailers, particularly small to mid-sized ones that are mainly attracted to mobile systems because of the low price, may find the devices can be limiting.
“There is a big push to promote tablet readers and mobile devices to small retailers,” Isaacman says. “But it is inconceivable that an iPhone or iPad can offer the same abilities as a touchscreen, integrated point-of-sale system.”
The common problem for bricks-and-mortar retailers that use mobile devices for everyday payments is that it is often difficult to integrate the payments data with other components of their operation.
For example, Isaacman says that physical retailers with e-commerce sites often want to integrate their online sales data with that of their in-store sales. That may be a problem because most mobile devices “don’t have the horsepower — the stability and processing power — to do that,” he says.
Additionally, he notes that while some very small retailers may find that an iPad or similar device works for their current operations, it may not be able to grow with the retailer’s business. “Most do not have the scale to handle more data as the business grows or adds more locations,” he says.
Other functions that retailers may have difficulty running off a mobile solution include integrating to inventory control data or handling store rewards programs.
Rather than use an iPad, Harbortouch suggests retailers turn to small integrated POS systems with touchscreens. The company offers what it calls a pre-POS system that includes a touchscreen, receipt printer, card reader and processing power, all in one device. It was originally deployed largely among restaurants and other hospitality companies but has more recently gained strength in other retail categories.
“We’re seeing interest from liquor stores, small grocery chains and other companies,” Isaacman says.
While integrated POS systems can run as high $10,000, Harbortouch has a program with no upfront purchase cost; instead, retailers pay a monthly service charge. Isaacman says that makes it competitive with mobile systems being sold based on the low cost of equipment purchase.
While the hospitality industry likes the functionality of taking an order and sending it back to the kitchen while recording the sale information, retailers like that it can be integrated to inventory management systems and customized to fit their setting.
While the system has been available for nearly three years, only recently has the use broadened into the general retail environment. “We are seeing retailers start to jump onboard almost as fast as the hospitality industry has in the past,” Isaacman says.
Not everyone agrees that mobile devices don’t work for small retailers.
Avivah Litan, vice president and analyst for Gartner Research, says that the choice between integrated POS systems and mobile devices will vary by individual retailers. Each retailer will have to assess its needs, set its priorities and decide which system works best.
For example, while Litan agrees that the payment data from a mobile device can’t always be integrated into back-office data systems, not every retailer wants to do that.
“Some companies want to separate the payment data from other information contained in the POS system,” she says. “Often that works best from the view of PCI compliance. That way you can keep the card data out of your backend system.”
And while current mobile payment systems lack the functionality and features available with traditional POS systems, “I think most of the mobile system vendors will be building on to their systems and adding more features in the near future,” she says.
For now, Litan says the selling point of most mobile devices is still price.
“Merchants care about price and they may be willing to give up some of the feature-rich systems to get a really low price,” she says.