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Who’s Afraid Of The Big Bad POS? Apparently, You Are

Written by Evan Schuman
March 23rd, 2011

To a retail IT exec, there’s only one thing more frightening than trying out a new mobile payment approach, given the temporary current state of standards lawlessness. That single more frightening thing is monkeying with POS. And that fear, in turn, could be why some third-party payment offerings are getting more serious consideration today than they did six months ago.

On Tuesday (March 22), payment processor First Data rolled out a mobile service that nicely illustrates the problem. A program dubbed mVoucher (for mobile vouchers) is a service to support gift cards, prepaid value cards and coupons for mobile users. The idea is that First Data will track the usage of these cards and coupons on its systems, making sure, for example, that a mobile coupon is only used once per customer. A retailer’s system would need do little other than check in with First Data and ask if it’s OK to redeem this particular coupon.

Why couldn’t most large retailers do it themselves, given that the functionality here is not overly complex? The answer is that they can. So why might they not? Simply put: the POS fear, when mobile is involved.

It’s an interesting twist on the age-old FUD (Fear Uncertainty and Doubt) selling tactic. But in this case, the vendor isn’t spreading FUD about its products. It’s relying on retailers already having FUD about connecting mobile with POS, creating an opportunity for an outsourced service that might not have otherwise existed.

Creating mobile applications that perform all types of wonderful functions is, done with a decent amount of care, relatively safe. The risks come when those apps touch the chain’s POS system. When a mobile experiment goes awry, it’s not bad, but its damage is limited to that experiment. And mobile users are—for the moment—quite tolerant of these glitches, given the youth of the technology. (Yes, there’s an upside to low expectations.) But when such a trial is integrated with POS, a glitch then can threaten disaster, with all payments potentially disrupted.

And yet, until mobile apps are integrated with POS, there’s a huge limit on what can happen. Mobile payment, gift card, CRM interactions, one-to-one marketing and authentication—all of which could be revolutionized with mobile—all-but-require POS interactions.

There’s no good time or reason to outsource, and different chains will react differently, of course. But we’re seeing IT execs who would typically not want to outsource many payment functions that they can easily handle flipping that view when it comes to mobile.

Why? Even if it means higher expenses, the comfort of knowing that the damage of a trial blowup might be somewhat mitigated by external hosting is a big part of it.


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2 Comments | Read Who’s Afraid Of The Big Bad POS? Apparently, You Are

  1. Samantha Noble Says:

    In regard to Legacy systems, what is the plan for most retailers with this equipment? As new mobile technology and couponing continues to increase in popularity are you going to purchase new equipment including tablets and smaller footprint hardware like kiosks, or are you going to continue to be budget-saavy and stick with older systems as long as possible?

  2. Thad Peterson Says:

    Concern about touching POS with mobile is legitimate for the obvious reason that messing with the revenue stream is a scary thing. Beyond that, while retailers may be able to figure out mobile connectivity on their own, I’m not sure that it’s a great idea EVEN IF the POS system
    is at risk. Here’s why;

    1) Mobile is no more a core competency of a retailer than building and maintaining a POS platform is.

    2) It’s a highly dynamic, very fluid environment that will evolve even more quickly than the web and it will be very difficult for a retailer to stay on top of it.

    3) Mobile is much more than payments. It would require resource to optimize the value of the mobile connection and the retailer may miss opportunities to leverage the platform that a third party provider might deliver.

    Connecting into the more current generations of IP driven POS systems is relatively straightforward and low risk, once the internal FUD factor you describe is overcome. A third party connection also lessens the pressure on the POS systems development queue which can
    accelerate the time it takes to get a mobile application up and running. The technology environment is moving to an app/API world and mobile might be the very best application of that approach that is out there.

    Mobile need not be a high risk, highly complicated, expensive play for a retailer, if they have the right partner.

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