News

by Ken Paull

I must begin by apologizing to any of you who read my column about mobile payments a few months back. I thought I had a pretty good perspective on where we were in this space but after joining ROAM Data recently, I must say that my view was not only outdated but also naïve. Mobile is moving so fast that if you’re not fully plugged in on a weekly basis – you’re working with old information. The ramp up in shipments of credit card readers for smart phones and tablet pc’s is staggering. Just in the U.S. alone, somewhere around one million (yes I said 1M) appliances with new merchant accounts have been set up. I had tried to sound the warning bell a few months ago that we would be seeing a whole new breed of competition entering our market. We had seen Square and their direct to merchant model but I would never have predicted that you’d now be able to walk in to a Verizon store and purchase a complete set-up from the likes of Intuit. I’m sure this is only one of the first of many retail and e-tail locations where “Merchant in a Box” will be showing up.

The growth forecasts for this segment are truly explosive and we have barely yet seen the impact of tablets and e-reader enabled devices hitting the market. Much of this volume represents new segments for electronic payment acceptance—merchants previously either not accepting credit/debit cards or accepting but without the card present or swiped. However, a significant proportion of this new technology is replacing the traditional payment terminal as we have known it. For those in the ISO/MSP and processing industries, if you do not already have a competitive strategy in place for this rapidly emerging market, the time is now to put one in place and begin executing on it! There will be other Square type offerings entering the market and this threat should not be taken lightly. I realize that there are a number of you already moving forward with solid plans in this arena and I applaud you for your foresight.

Not that I mind any of you contacting me for help in this arena but let me begin by trying to provide some general advice on how to put an offering together which is competitive and positioned to stay that way:

Is the solution device, network and payment scheme agnostic? 
For example, will it support the latest Androids, iPhone/iPad or Blackberry? Will it work on AT&T, Verizon, Sprint, T-Mobile or Metro PCS? Is it certified with any processors who you currently use or may in the future utilize? Will it accept all major tender types and not try to push your customers towards a particular one?

Think of payments acceptance as just the bare minimum requirement. 
What other value-added services can be wrapped around the core payments application such as loyalty, gift, promotions and advertising? Just as in the terminal market, these services will evolve to become competitive requirements rather than nice to have options. 

Will my vendor or vendors be there for the long haul and keep their solution(s) up to date?
 Are they or will they be competing with me in any way or are they focused on making me successful? Can I differentiate my own version of the solution with custom branding or white labeling?

Lastly, is the solution easy to deploy, train and support?
 Is it secure or will you be creating a future mess to deal with, as might be the case for Square? Can the solution scale for large merchants with applications that can easily integrate into their custom environments? These critical areas cannot to be underestimated in determining your true cost of sales and retention.

Printed in Transaction World Magazine
November 2011