From self-service airtime vending to sophisticated pharmaceutical dispensing, point of sale (POS) devices have moved beyond their primary function of payment solution to become a sophisticated retail customer service interface.
The evolution of point of sale devices has resulted in a number of innovations for both customers and retailers in a variety of sectors.
Originally, POS devices were paper-based, through ‘zip-zap’ machines. The first electronic devices were authorisation-based only and the imprint of the card was all that was required, explain Etienne Wilmans and Ralph Tschohl, Acceptance account managers at Visa Sub-Saharan Africa. Devices then evolved to do full transaction processing, meaning that merchants no longer had to take credit card slips to the bank. The devices were effectively little desktop computers that communicated to the bank’s back office system via a telephone line (X25).
“As communication protocols improved, and with the advent of the internet, these devices were slowly migrated to IP communication protocol,” they say. “This paved the way for migration from a landline to a cellular network, thereby reducing the merchants’ telephone costs. Since there is now a wide base of desktop computers, i.e. POS devices, in the marketplace that are capable of communicating with other computers using the IP protocol, it seemed logical to increase the number of applications on the device.”
These new applications were initially financial applications such as storage of ‘hot card’ data on the device (a hot card is a credit card suspected of being used for fraudulent activity). Things evolved again and devices can now receive software upgrades remotely, trigger the settlement of transactions and update the resident ‘hot card’ file.
“As the processing capabilities increased, the next logical step was to put non-card-related applications on the device, like cash withdrawals, prepaid airtime and electricity sales, support for utility and bill payments as well as supporting loyalty applications and gift cards through multiple host acquiring,” Wilmans and Tschohl add.
As Laetitia Connor, development manager at QBCon, says: “It seems that every time you walk into a retail-type establishment, there is some new technology either being tested out or implemented to make the consumer (and retailer) experience easier and faster. New technology in POS systems has ushered in extraordinary economic and productivity gains for shoppers, retailers and manufacturers alike.”
Wilmans and Tschohl cite the example of Visa’s 2010 Fifa World Cup pre-paid kiosk.
“The kiosk, or ‘Unattended Acceptance Terminal’, opened up opportunities in sectors and markets where cards were normally not accepted,” they say.
For example, the Fifa World Cup stadiums, which were exclusively Visa acceptance only, can deploy a kiosk that dispenses Visa pre-paid cards to spectators that have other electronic payment schemes’ cards. Battery-powered GPRS-enabled POS devices were also deployed at merchandising and food and beverage stores during the event, demonstrating how cash could ultimately be replaced at venues like these.
The recent 2010 Youth Olympics in Singapore saw Visa introduce the world’s first Visa Prepaid card, which combines general purpose payment, transit fare acceptance and event ticketing features all in one. The Visa Prepaid card’s functions include the ability to make purchases at Visa merchants, and pay for trips on Singapore’s public transportation system. The cards were also used as the means of entry to the Singapore 2010 Youth Olympic Games (YOG) opening and closing ceremonies.
These developments are just the tip of the iceberg when it comes to what point of sales devices could potentially morph into. In the US, the healthcare industry is getting on board by offering ATM-like machines that dispense prescription drugs.
While South Africa is not quite at that point yet, we are seeing similar trends emerging. Connor says that POS touch-screens and power-efficient ‘always-on’ POS systems continue to be at the forefront of trends in this space. Security products including payment processing software and cameras are crucial for both new and existing retailers.
“On the payment processing front, direct integration with processors is a hot topic in retail POS circles. Many developers are moving away from payment middleware and gateway solutions, opting instead to integrate directly with payment processors,” Connor says.
She adds that custom kiosks or self-help stations will likely continue to be popular. “Shoppers find that the ‘do-it-yourself’ aspect of the technology makes the experience not only easier, but pleasurable as well.”
Anton Leal, MD of XLink, says that moves to self-service kiosks are being driven by technology having become bidirectional, rather than merely offering one-way communication.
Xlink is in the process of working on a solution, in the formal taxi market, that will attach to the back of a taxi driver’s chair and allow taxis to accept credit cards, something that has been an important focus for the industry for some time. In addition, the device can provide other useful information to the passenger such as details of restaurants in the area, local attractions and other intelligence.
Another ongoing trend in this arena is the use of digital signage for advertising or informational purposes. Shoppers are constantly seeking more information about the products they consume, and want to make purchase decisions easily and quickly.
“The top in-demand technologies end users seek increase product awareness, reviews, price comparisons and related items. This is accomplished by information kiosks and digital signage,” Connor comments.
Leal sees the increasing use of Radio Frequency Identification tags (RFID) as a growing trend. In the future, he says, the consumer will be able to push their trolley and the POS device will pick up whatever is in the trolley remotely through RFID.
“This will speed up ringing up at the till,” he says.
He also believes that more loyalty-based initiatives will become part of the POS evolution in South Africa. For example, if a customer has a particular product in their trolley that the retail store is trying to push, the customer can accumulate credits of prepaid airtime or other loyalty rewards.
Going forward, Leal foresees the use of near-field communication where eventually “you will be able to just tap your card rather than swipe it”.
Vending kiosk solutions will also benefit from bidirectional communication, Leal notes, so that a person can communicate with the vending machine to check if the stock is correct and if the temperature is okay so that the stock won’t go off.
Beyond that, Leal says cellphones will replace cards as a primary payment method.
“We need to understand where POS and card acceptance is going. Your cell phone will be your credit card. It will have near-field communication and everything will be done on your registered device,” he says, though he acknowledges that because retailers and banks have invested heavily in credit card machines they will want them to be used for some time still.
“Of course, people still like to get a hard copy slip too.”
The benefits of such innovations are clear: shorter queues, empowered consumers who can choose how and when to access services, and new possibilities for service offerings from a variety of sectors. The challenges – in terms of regulations from the banking industry, consumer trust and cost – remain, but South Africa is embracing the possibilities of point of sale evolution.