The payments industry has not been particularly welcoming to the open technologies movement. But as other industry segments have realized, the open movement is compelling. Even former mainframe monopolist IBM has transformed itself into an advocate of open technology.
Merchant countertop payments have largely been resistant to market forces. In part, that’s due to what has essentially been a de facto duopoly (outside Asia, at least), in which other market leaders offer tightly controlled proprietary payment devices. In the past, acquirers had little option but to play along.
The constraints of proprietary countertop payment devices have narrowly constricted payments to physical card transactions and inhibited access to third-party apps. This restricts merchants’ abilities to fully leverage the payment experience and integrate an array of retail tools to provide a more robust customer experience and omni-channel.
“Payment terminals didn’t change drastically for 30 years, nor did the services provided with it,” AEVI Chief Product Officer Mike Camerling said in a recent interview with PYMNTS.com. “People expect to do more,” he added, and “the good old plastics bricks are getting replaced with more stylish devices, with payments becoming a more attractive process for consumers and becoming more integrated into their private lives.”
Banks, acquirers and merchants want to do more to take advantage of the consumerization of technology. Merchants want solutions that improve consumer interaction satisfaction with the shopping experience. Their service providers want the freedom to provide integrated and adaptable portfolios that offer flexibility and innovation to merchants.
Satisfying the customer
Merchants and acquirers recognize consumers have more shopping options every day and can turn to an online alternative if they can’t be satisfied in a retail establishment.
Even though online commerce is fundamentally changing the nature of shopping, and growing quickly, it is still a relatively small percentage: in the U.S., for example, fourth quarter online sales represented less than 10% of total retail sales.
Global retail annual sales are projected to rise to $28 trillion by 2019, so even accounting for faster growth in ecommerce, there’s still a huge number of payments to be transacted in traditional commerce.
Doing more with payments
Merchants not only want to encourage shoppers to bring those payments into their stores, but they also want greater efficiency and productivity at the countertop.
The ‘open’ payments movement promises to bring the power of value-added apps and services to merchants. Banks will be able to offer bespoke packages, complete with multiple-payment options, intuitive loyalty schemes, and back-end business tools designed to offer greater flexibility and choice to their merchants.
Acquirers will be able to end the constraints of hardware vendors by tailoring apps and services to meet the needs of their merchants. Merchants, on the other hand, will be able to choose what suits their needs from an open marketplace of apps and services.
Some legacy vendors hope to short-circuit this movement by creating their own closed marketplaces, but software developers will migrate to marketplaces that allow them to provide the same app across multiple vendor product lines. That’s the beauty of the open movement.