Why banks can profit from “smart” POS

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The global point of sale (POS) terminal market size is expected to grow from $62 billion in 2018 to $108 billion by 2025, according to a recent report by Grand View Research.

“Smart” POS devices can provide much more.

Small to medium-sized businesses want to improve their in-store experience for digital savvy consumers.

Merchants are looking for business solutions rather than merchant accounts – especially small and medium-sized businesses. Yet for decades the technology at their fingertips has often been large and clunky POS devices running on software that doesn’t talk to other POS devices and back-office software.

That is finally changing now that “smart” POS devices can provide much more: from customer loyalty schemes, information on employee shifts and holidays to a merchant’s stock levels.

In an interview with FinTech Futures, Nicky Koopman, senior vice-president, content and value-added services at AEVI, which provides an open platform combining payments, third-party apps and devices, says banks can benefit from growing demand for smart POS devices.

First, however, they need to see this change as a strategy rather than simply an updated product.

There is a shift from traditional payment services provided by banks and others − typically based on high-volume, lost cost transactions – to digital services that can increase customer engagement and improve the productivity of a business.

Smart POS devices are faster, more rugged and reliable than “mobile” POS systems, which often include a consumer-grade tablet and a dongle/printer connected via Bluetooth, Koopman says.

“SmartPOS is not ‘just a product’, it requires a strategy shift focused on value creation rather than cost.”

It’s easy to start looking at the proposition, a product, but POS devices and services also need to handle e-sales, merchant onboarding and customer support, she says.

Each merchant type will have different priorities. A small, independent coffee shop, for example, will want solutions that, for example, allow them to handle the busiest times, turn around tables quickly and manage staff rota.

A hair salon will want solutions that allow them to provide online booking linked with a CRM (customer relationship management) system, that push notifications to the customers to remind them of the appointment and to thank them for their custom.

Picking the right POS software can be tricky. There are numerous POS products out there. A quick google search brings up over 350 POS-focused software.

For small and medium-sized merchants the choice can be overwhelming − and they often have limited knowledge and resources to shop around. These merchants, Koopman says, “are looking for a partner that can help them overcome business challenges”.

“Banks needs to be prepared to train its sales teams to have a different sales discussion with their merchant, away from prices and towards value creation,” she continues. “It is more complex, but also more satisfying, as banks can start increasing their trusted adviser role and help their business customers solve problems.”

Banks can use their in-depth knowledge of payment services and partnerships with fintech companies to help their business customers digitalise services and back offices, Koopman adds.

Banks will also need to provide technology that is flexible enough to meet the needs of different customers and integrate with their IT. They can also help merchants pick the right apps to use with their smart POS.

Koopman says AEVI is doing its bit to help inter-operability on multiple platforms by providing an open and technologically “agnostic” platform that enables merchant payment solution providers to shift to digital services.

AEVI can help merchant banks and acquirers, move their classic payments proposition to their merchants into a new digital world of apps and services, payment and smart devices, she says.

The rise of smart POS devices and demand for new digital services could be a great opportunity for banks. But it they ignore the trend, or don’t adjust their business models, fintechs will fill the gap.

This article is also featured in the summer November 2019 issue of the Banking Technology magazine.

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