Consumers are demanding an increased range of payment acceptance methods. They want more than just cash and Visa/Mastercard plastic card payment options. Retail merchants have recognised this customer need and realise that in the current extremely competitive market they have to respond. Our recent survey on Alternative Payment Methods (APMs) revealed that 79% of businesses viewed APMs to be Very important or Important to their businesses and customers. They see that APMs have become a current market requirement and are required to support international market expansion. The results also showed that 71% of businesses are ready to invest now in expanding their support for APMs in order to meet this customer demand for greater choice.
Alternative payment methods use a variety of underlying technologies and payment rails. Though there is universal agreement that in the future the smartphone will be the most important payment instrument/device to trigger these payments. Smartphones can be used for mobile payments both in-store and online, direct bank account payment transfers, QR code payments like Alipay, social payments like WeChat Pay and Facebook, as well as for payments via crypto currencies. Consumer demand for crypto currencies as a retail payment option is however relatively low at the moment. High interest in Bitcoin is mainly as an investment option rather than as a means of payment.
With consumers increasingly shopping across multiple sales channels in this Omni-channel and digital age, it has become critical that merchants have consistency of payment methods. PayPal, the leading APM for online sales, have recognised this and been working hard to boost their in-store payments acceptance network and recently announced plans to acquire iZettle. Without payments consistency, services like return/refund in store and ‘Click and Collect’ cannot be seamlessly supported.
One of the main barriers to expanding payment options in-store has been the high effort and cost of completing integration between the POS (business sales application) and the payment application/provider. A factor in this is that most integrations are bespoke in nature and use proprietary interfaces meaning that multiple projects have to be completed. With specialist R&D resources being in short supply and vendors reluctant to commit to development without customer funding being in place, new payment acceptance options often remain on the roadmap for years.
One way to simplify support for APMs is to move the payment processing business logic to the cloud and away from the POS. Integration to the POS application is currently the major barrier as any change to the POS codebase results in significant regression testing and sometimes even recertification. Cloud deployments have many advantages and have become the norm for most business IT applications these days. At our recent Cloud Payments Summit it was confirmed that security and resilience concerns could be overcome if the right approaches and products are used. Shifting to a centralised deployment model allows APM integrations to be done just once making it easier, quicker and cheaper to introduce new payment options. Current designs typically expect multiple payment applications to reside on the POS and integrations to happen locally in-store.
The STS position
Here at STS we are well prepared for a greater number of cloud deployments as both G8 and PayOp have been designed upfront with this in mind. We are advocating that in future POS applications should send all payment requests to a new cloud payments hub/switch. This would be agnostic of the payment method, provider and technology, allowing the POS application to be removed from the payment transaction processing. The customer preferred payment method and routing instructions will then be applied by the cloud based payment application. The result is that the POS can be de-scoped and that multiple new payment options can be added quicker and at lower cost. The approach has the added advantage that it can be used across multiple sales channels and support a variety of technologies including ‘PaybyLink” and QR codes.
We would be pleased to hold discussions with business partners and customers on how this new approach, which allows merchants to broaden payment acceptance options, can be implemented. Do let us know your thoughts and let’s move together to a new way of accepting payments.