Over the years, payment processing technologies have undergone significant changes.
Today, the internet and mobile devices are causing bigger shifts than ever before. While many resist these changes, others embrace them.
Every business will be affected by new POS technologies and payment solutions, so it’s important to know which direction the industry is headed.
A Brief History of the POS Industry: From Credit Cards to Today
Beginning in the 1950s, credit cards and point-of-sale technology revolutionized the retail industry.
Since that time, we’ve seen a few major evolutions in the industry:
Credit and debit cards boosted sales for retailers.
Credit cards really took off in the 1950s and 1960s, with the establishment of a revolving credit system and the introduction of a debit card. Point-of-sale devices arrived soon after and allowed merchants and retailers to accept payments via these cards.
With these new technologies in the marketplace, the use of cash and check decreased, credit and debit payments increased, and the number of transactions also increased. Over the intervening decades, credit and debit POS systems have become standard for most retailers in the developed world.
Retailers who adopted POS technologies often saw more sales as a result.
Smartphones are poised to revolutionize the payment ecosystem even more.
Mobile wallets give customers the ability to pay directly from their smartphone, without the need for cards, cash, or checks. This new technology offers a number of benefits to customers and businesses.
Not only are mobile wallets more convenient, some argue that they are actually more secure than credit cards. POS terminals that utilize near field communications (NFC) will allow merchants to accept payments via mobile wallets, but there are several obstacles to widespread adoption, such as upgrade costs and security concerns.
Increased rates of fraud are pushing more stringent security measures in the POS industry.
Fraud continues to be a worldwide problem. Between 2007 and 2014, credit card fraud doubled – and 37% of this fraud came in the form of counterfeit cards. EMV cards and chip-enabled POS devices are designed to fight this problem.
Another solution is the aforementioned mobile wallet. Traditional credit cards use a person’s signature as a security measure – but how often do retail staff compare card signatures against receipts? A mobile wallet that requires a fingerprint, on the other hand, is much more difficult to counterfeit.
Conclusion: Complexity Slows Adoption Rates, But Change Is Inevitable
The payment processing chain has become quite complicated and involves merchants, banks, credit card companies, software providers, and more.
Concerns over fraud, upgrade costs, profit margins, and adoption rates are preventing immediate acceptance of these new technologies.
However, as POS security systems continue improve – and the potential profits of these new technologies becomes clearer – we can expect to see another revolution in the way merchants and customers perform transactions.