The “cloud” is seemingly everywhere these days, even when it comes to merchant payment transactions. But how many merchants really understand what solution providers are delivering in cloud-based solutions?
Unfortunately, in every industry the word cloud is thrown around loosely as marketers seem to think everything must have a cloud angle to be relevant. Hopefully in the payments industry we can be disciplined enough to clearly delineate what the cloud does and does not do so that merchants come to realize what is and is not beneficial.
What payment solution providers should not be doing is relying on hazy, blanket terms that fail to communicate the actual value being delivered. That can only confuse merchants and ultimately lead to dissatisfaction and unhappiness. After all, if all the magic happens in the cloud, what is the added value that the solution provider brings to the merchant countertop?
We’re already seeing a proliferation of “cloud POS” or “cloud-based POS” solutions, you can read our app partner blog here. The number of available solutions is huge, but not all effectively communicate what the cloud actually brings to the merchant countertop. Most conflate payments and value-added applications and services as one solution.
When it comes to the actual payment transaction, the true benefit is to the processor, not the merchant. Processors are able to minimize their costs for hardware, software, networks, and support staff by shifting transactions from private data centers to cloud-based data centers. Ultimately that should produce a reduced cost per transaction for the merchant, but those prices are going down already regardless of whether the processor uses a traditional data center or the cloud.
That’s not to say that processors and cloud don’t have any direct benefits for SMBs. Because they are faster on their feet and don’t have to worry about creating fixed infrastructure in order to offer new services, processors can become more creative in expanding their portfolio and in doing so are increasingly likely to partner with fintech innovators to achieve competitive advantage or competitive parity.
Let’s get smart with smart POS
Where the cloud really does benefit merchants is in its ability to leverage technology partnerships and encourage third-party developers to design new apps and services that are imminently easier to distribute than in the past.
Old legacy payment terminals were mostly used for a single app – payment. Some merchants also took advantage of relatively kludgy third-party apps such as phone card activation and employee time management. But one or two such apps were pretty much the limit, and because of the closed nature of device ecosystems, few app developers focused on the POS.
In the past, the process of adding a third-party app to a legacy payment device was complex, time-consuming, and costly. Anything that touched the payment app required a full recertification effort that could take many months.
But today’s POS device is rapidly transforming into a dynamic point of interaction where payment can sit beside value-added applications and services, ranging from loyalty programs, to scheduling, to instant credit applications and approval. An open platform that leverages Android devices and application programming interfaces (APIs) can deliver a multitude of standalone apps that with the right orchestration and automation can seamlessly interact in the business process alongside the payment app.
The cloud plays a role in that, for sure, by providing a better communications medium than telephone lines and by fostering reliance on open standards and protocols. But the merchant needs to realize that it is the solution provider’s market expertise that can create a uniquely tailored smart POS environment to suit specific needs.
How to sell ‘the cloud’
The cloud makes it easier for solution providers to deliver a cost-effective solution at the POI that is more secure and provides more value-added apps and services. And these solutions can be provided in a range of compatible form factors, from smartphones to compact terminals to larger screen devices, all of which can run the same applications and access a growing range of reports and other business management functions.
If the merchant becomes convinced that all the magic happens in the cloud, they’ll start to question the value the get from their merchant payment solutions provider. It’s important to sell the merchant on the value of what sits on their countertop or in their hands. They are holding a solution that accomplishes just about everything they need to do. If the merchant thinks the cloud is the solution, it’s far easier to justify switching solution providers.
There’s value in marketing specific aspects of “cloud-connected” solutions, such as ensuring that transactions are processed securely and that value-added apps connect to back-end services without merchants having to worry about how to make it all work, such as adding ecommerce capabilities to their offline retail offerings.
But don’t wrap yourself too tightly within the cloud mantle. Learn how to use the cloud effectively in your marketing, rather than letting it obscure the value you are delivering to the point of interaction.
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