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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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