I recently attended the Retail Solution Providers Association Convention in in Las Vegas, otherwise known as RetailNOW. The event featured a bevy of new retail point of sale solutions. I don’t think it’s an overstatement to say that the words "iPad" and "smartphone" were uttered more often than the term "POS." Everyone seemed to be trying to figure out how to integrate and deploy these new concepts and solutions while adjusting their existing business model to make it fit.
I had lunch one afternoon with an older gentleman who got started in the business selling mechanical cash registers. That's right: no circuits, microprocessors or digital displays; the machines he sold functioned using gears, levers and switches. “They only produced a single total,” he proclaimed. In contrast, the gentleman sitting on my other side was the CEO of a well-known retail touchscreen POS system.
The entire industry that produces POS hardware and software seemed to be there along with all the other businesses that contribute to and support the industry. The show floor itself was a microcosm of the history of point of sale systems. In a single row were vendors for ribbons and carbon paper, with the next booth over being a software house with an iPad POS app which utilized a battery-powered Bluetooth printer for receipts. It seemed the market is in the midst of great change, which is coming at them a little faster than the industry seemed to like…
Some of the panel discussions went beyond sound bites and took a deeper dive than usual examining developing mobile technologies and the impact that they will have in the days and years to come. I found the technology vision panel discussion extremely interesting and insightful. One of the panelists for the session was Erik Vlugt of VeriFone. I had attended his individual afternoon session on the previous day that dealt with NFC solutions for retail.
It was his session that brought awareness to a subject that I believe will be greatly discussed moving forward: will payment data be worth more than payment fees?
The question itself indicates that the answer is not yet. However, I see many of these new alternative POS providers being more concerned with information that surrounds the sale rather than the information that completes the sale.
And they should. According to IBM, at the present, 2.5 quintillion (2.5×1018) bytes of data are created every single day. None of this type of information was able to be gathered by the mechanical cash registers, sold in the days of yore.
From a merchant perspective, customer preferences – sizes, colors, flavors, dates, selections, location, and much more – can now be captured and recorded, allowing a continuing, gradual profile of the customer to be aggregated and built.
And why does that matter? So merchants can market to their customers using a number of different methodologies: online, e-mail, text messages, direct mail, in-store experiences and more. This collection of information, often referred to now as "Big Data," is highly desirable – and it's only growing. One recent report in Science estimated that since the 1980s, the technological per-capita capacity to store information has doubled every 40 months! There's no reason to believe that trend won't continue.
As you can well imagine, all this data is being amassed and will be used against you – or in your favor, depending on who you're talking to. As my colleague analyst David Schropfer pointed out, in the near future transaction processing will become commoditized, much in the same way that VoIP commoditized the international long distance minute. We’re already starting to see signs of this as transaction companies look to eliminate interchange and replace that income from loyalty and reward services.
Rest assured that consumer data, combined with mobile advertising, "right now" offers, NFC and other immediate opportunities, will make payment data worth more than payment fees in Generation-M!
The organizer of the Social Mobile Payments conference series is a pioneer in e-POS. Burke has extensive knowledge in electronic transactions, and mobile commerce. His experience includes product development, project management and brand marketing including his current work in mobile money ecosystems and its integration into existing economies.