As an inflection point in the adoption of alternative payment services by consumers approaches, businesses must familiarise with FinTech and invest in relevant infrastructure.
Brand reputation, the quality of a product and customer relationships have long been three pillars of success for any business. Now, in the digital age, we are presented with a new integral element in the marketing mix: ‘the convenience of a transaction’.
Thanks to advancements in financial technology (FinTech), consumers expect to be able to pay for goods or services in a quick and secure manner, often without cash.
To put it another way: a business might sell the greatest cup of coffee in town but the ‘cash only’ sign on the front door is increasingly a deal-breaker for today’s consumer.
Critics of businesses in this situation, often fail to address the businesses’ side of the story. Traditionally, any business or organisation that wished to put a point of sale (POS) terminal in their stores would have to pay for an additional phone line, high transaction fees, device rental and other costs.
These costs have deterred businesses from accepting cards in the past but new mobile point of sale (mPOS) services have successfully disrupted the market, bringing FinTech to SMEs and micro-merchants.
The mPOS Revolution
In 2012, there was a scramble in the European FinTech space. Companies like Swedish-based iZettle and Germany-based payleven, were now on a mission to get as many micro-merchants and relevant SMEs on-board as they could.
What were they promising?
In a nutshell: a card reader, a pin pad and an app. The market was about to be disrupted by a new wave of ‘business in a box’ solutions.
Three years later and a number of competitors popped up and cornered their local markets. In Ireland, SumUp is a popular choice with merchants. These companies have tried to diversify their offerings by introducing new incentives like a scalable fee structure, fast pay-outs to business accounts, or no subscription fees.
For the first time, businesses could accept card payments without depending solely on a business-to-bank relationship.
An mPOS setup involves a Bluetooth-enabled card reader and a PIN pad. Customers use the device the same way they would a regular POS terminal. They insert their card, and enter their Chip and PIN.
With mPOS, the merchant’s till is a smartphone or a tablet that has the service provider’s app installed on it. This app communicates with the reader to facilitate the transaction, but for security purposes the customer’s card details are never stored on the device and the merchant cannot access them.
Another selling point of the mPOS is the availability of transaction analytics for the merchant. Most mPOS services offer an on-screen analytics dashboard that lets a business track their finances from month-to-month and year-to-year etc.
A business going down the mPOS route should make sure they have reliable broadband before signing up to service, as the payments service is web based.
What Do I Need to Get mPOS For My Business?
- A smart device (smartphone or tablet)
- A card reader and a pin pad from a provider of your choice
- Reliable broadband
- A bank account
Alternative Mobile and App Payments
For Irish businesses looking to satisfy the tech-savvy consumer, biting the bullet and finally accepting card payments may not be enough of a leap. There is a whole new array of popular alternative payments services that businesses must get to grips with in order to keep the coffers full.
- PayPal
Not so much a
new service to anyone who has ever paid online, but PayPal’s evolution into bricks and mortar stores is something to shout about.
With the PayPal app customers can log in and use the GPS on their phone to search for nearby businesses that accept PayPal as a payment method.
When a compatible business is found, and the customer is present in the store, they simply declare that they are paying with PayPal to the clerk.
They then press the icon for the store on the app and a ‘Slide to Pay’ option appears on the customer’s smartphone. Businesses can verify the ID on the transaction as a photo of the user appears on the payments screen.
Alternatively, if a store is not equipped to accept PayPal in their physical location, a customer can use the app to ‘send and receive’ funds to the business’s account the old fashioned way, with an email address.
What Do I Need to Get PayPal For My Business?
- A PayPal business account
- PayPal merchant services and support (some services limited in Ireland)
- Reliable WiFi
- A smart device
- An email address
- Apple Pay
Although Apple Pay has been regarded as a slow starter in terms of user adoption one year on from its launch, it is expected to pick up in 2016. This is based on predictions that more Apple customers will have access to compatible handsets when the price is reduced on the iPhone 6, next year.
Fascinatingly, the Irish media is constantly talking about Apple Pay, when in fact the service is not fully rolled out (for consumers) in the country. Apple Pay uses NFC (near field communication/contactless) technology to conduct transactions.
The iPhone 6 has a built in NFC sensor that interacts with the POS, which in turn accepts it as if it were a payments card.
As with contactless debit cards, a business that wishes to accept Apple Pay simply needs a POS terminal that accepts NFC-enabled cards. (Apple suggests a business checks that their particular POS model of choice will work with the service).
On the customer side, the user needs to upload their payment card of choice into the Apple Wallet app. The card needs to be from a participating bank. Currently in Ireland consumers do not have the option to upload payments cards from Irish banks. However, merchants can accept Apple Pay payments from UK and US visitors.
There are three reasons people love to talk about Apple Pay, despite its slow start and widespread unavailability.
- Apple chose to design Apple Pay to work with current NFC technology, meaning that businesses didn’t need to go and buy another POS device. This was a popular decision with a number of payment industry stakeholders.
- After month’s of industry critics asking which type of security standard the service would go for, on device or cloud based, it chose to use both. It even threw in fingerprint authentication as well.
- It works with the Apple Watch. Fans of cutting edge tech are delighted to read and write about the novelty of making payments with wearable tech.
What Do I Need to Accept Apple Pay in My Business?
- A POS terminal that accepts contactless cards
- A merchant services account with a bank (some mPOS providers also support it)
- A phone line to support the POS terminal
Is There a Mass Adoption of Mobile Payments?
Advocating on behalf of alternative payment acceptance by businesses can be difficult. This is especially trying in a country with a small population and when research data suggests that mass adoption by consumers has not yet hit a tipping point.
According to the Deloitte report ‘TMT Predictions 2015: Contactless mobile payments (finally) gain momentum’, late 2015-early 2016 will be an inflection point for the usage of mobile phones for NFC-enabled in-store payments globally.
The report says:
“We predict that by end-2015, five percent of the base of 600-650 million near-field communication (NFC) equipped phones will be used at least once a month to make contactless in-store payments at retail outlets. This compares with monthly usage by less than 0.5 percent of the 450-500 million NFC-phone owners as of mid-2014. Contactless mobile payment will not be mainstream by end-2015, but niche adoption will be a major progression from near nil in prior years.”
The reason late 2015-early 2016 has been earmarked by Deloitte is because “multiple prerequisites for mainstream adoption” will finally be put into place. This refers to satisfying financial institutions, merchants, consumers, technology vendors and carriers.
This is certainly true of Apple, which was reported in the summer of 2015 to be actively seeking out banking partners in Ireland to help bring Apple Pay to Irish consumers.
Irish businesses should prepare for and expect a turning point in the near future where alternative payment methods could dramatically increase in popularity among Irish consumers.