No More Costanza Wallet

Mobile platforms pushing POS trends, but legacy systems also evolving.

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Change is afoot in the point-of-sale (POS) arena, driven by services that do away with bulging wallets full of cards and receipts à la George Costanza of “Seinfeld.” But at this early stage, how it all turns out is no doubt months, maybe even years, away.

The ongoing explosion of mobile-payment players has become a mov­ing target of sorts. Start-ups such as LevelUp and Square are joining seasoned brands such as Heartland Payment Systems, Google and Pay­Pal to roll out new, innovative ways for foodservice-at-retail operators to expand their entrenched legacy POS technologies.

At the same time, established POS providers such as Par Technol­ogy Corp. and Radiant Systems are keeping the technological innovation coming, looking for ways to keep the POS experience as smooth and flexible as possible for both merchants and their paying customers. While mobile technology is garnering most of the attention, these longtime tech firms continue to offer operators the plat­forms they need to compete.

“At this point there are all these balls up in the air and everyone is waiting for the first one to come down. We are trying to decide which one the consumer will choose,” says Bruce Snyder, manager of IT retail systems for c-store retailer Kwik Trip, La Crosse, Wis.

Snyder says that as little as 10 years ago, the magnetic stripe was really the only game in town at POS terminals. Today, those same terminals can be equipped to handle upwards of six different ways for people to present themselves during checkout. Com­plexity is growing, with the endgame being an even higher level of cus­tomer convenience.

“It is all moving very fast, but we try very hard to stay a step ahead,” Snyder says.

To Swipe or Not to Swipe

Part of the reason for the quickened pace are the mobile-platform-based payment options popping up everywhere today. The biggest gen­eral names—Square, PayPal, Google, Lev­elUp (see sidebar, right)—are making the most noise in the mar­ketplace. Meanwhile, rumors are swirling that lurking in the shadows is the 800- pound gorilla of mobile computing: Apple. Reports indicate that Apple is readying a service called iWallet, which will give iPhone owners a financial-accounts control app and, using near-field communication (NFC) wireless technology, a way to complete mobile transactions.

Some tech providers such as Level- Up, PayPal and Google will link smartphone payment options to existing credit-card accounts. The idea is to make customer payments hassle-free: No need to reach into the wallet or purse for cash or even a credit/debit card; just scan your smartphone and pay for your food and drink.

Others, such as Square, offer ways for smaller retail-foodservice opera­tions—say a food truck or small, single-location operator—to accept standard credit-card payments when in the past it wasn’t possible due to cumbersome, expensive credit-card terminals.

Heartland Payment Systems rolled out in May its own mobile pay­ment system, Mobuyle Restaurant. Mobuyle puts full terminal capabili­ties into the hands of staff while also enabling a “store and forward” functional­ity to accept payments even if they don’t have cellular coverage or WiFi access. Data is never stored on the mobile device itself, and information is encrypted from the moment it’s entered.

For convenience-store chains and other larger foodservice-at-retail players, any of these technologies can be used to extend and expand POS opportu­nities while maintaining legacy cash-register systems, which are also rolling out new technologies such as Web ordering and customer data analytics as part of the mix.

While mobile-payment growth has not met some early expectations, tech research and consulting firm Gartner reports that worldwide mobile pay­ment users surpassed 141.1 million in 2011, up from 102.1 million in 2010. Gartner also predicted that 2011 worldwide mobile payment volume would total $86.1 billion, up 75.9% from 2010. And according to a 2010 report from IE Market Research, the global volume of mobile payment transactions is expected to grow to more than $1.13 trillion by 2014.

Last September, Google intro­duced Google Wallet, which uses NFC wireless technology for “single-tap” payments. Google Wallet supports two kinds of cards, Citi MasterCard credit cards and the Google Prepaid Card, but the company’s website says it “aims to eventually support all the payment cards” consumers keep in their wallets today.

The growth of nontraditional retailers such as food trucks and city markets has expanded the oppor­tunities for such services. Take the historic Reading Terminal Market in Philadelphia. Butch Dougherty, director of marketing for Iovine Brothers Produce, which owns both a grocery operation and a restaurant with premade takeout options in the market, has been using LevelUp for a few months. So far, he’s been happy with the results.

“LevelUp was very aggressive with its desire to be in the market,” Dough­erty says. “We didn’t have to commit very much financially, and our incen­tive is customers have an easy way to pay for a purchase. Technology is mov­ing toward everything being shifted to the smartphone.”

Currently, about one-third of the more than 80 merchants (including 32 foodservice entities) within the market, a Philadelphia landmark since the 1892, have signed on with LevelUp.

“Mobile-based purchasing is very much in its infancy, and there have been some challenges, some of which are technical,” Dougherty says. “But LevelUp is very proactive on the cus­tomer service side. We like the idea of it because the customer ultimately benefits.”

At Kwik Trip, there are two trends at the forefront of POS technology: the aforementioned rise of mobile pay­ments and the mandate coming from MasterCard and Visa centered on what is called “chip and choice” technology, which embeds an NFC-based chip on what looks like a traditional credit card. All that is required as payment is a quick swipe by the consumer. In this case, the credit card itself has swipe capabilities rather than a smartphone.

“The entire POS infrastructure built to support the magnetic stripe has been in place for so long and was so expensive to build, it is difficult to dislodge it,” Snyder says. “But the mobile payment movement may eventually get there, because it can be done at a relatively low cost.”

The Old with the New

On the traditional POS front, Peter Wolf, chief marketing offi­cer for Par Technology Corp., New Hartford, N.Y., is seeing much more focus on the aesthetics of the hardware as well as software usability. For retail associates, POS technology must require minimal training, so a new associate can be up and running ASAP.

“Most associates working today in the foodservice busi­ness are millennials, so we are integrating that factor into our design,” Wolf says. “Food retailers want a multi-touch approach that mimics using the iPad or iPhone.”

As for the mobile payment trend, Wolf says mobile pay­ment solutions may be popping up everywhere, but right now no one is quite sure what impact using consumer-grade devices will have on the overall POS landscape.

“They definitely will have an impact, but there always will be a place for a rugged, high-quality POS terminal,” Wolf says.

Douglas Henderson, vice president of sales for Radi­ant Systems, a POS system provider based in Alpharetta, Ga., says operators can no longer think about POS as the traditional fixed terminal that resides on the counter­top. Instead, can POS technology providers make it so consumers can do a transaction with a retailer without having to physically be at a POS terminal? Henderson cites Web-based online ordering systems as a prime example.

Smartphone ordering is also shaping up to be a powerful POS force, says Henderson. Radiant is currently piloting a smartphone-based application that allows a consumer, through a smartphone, to authorize orders for car washes, food, fuel, etc., at a c-store.

“The rise and popularity of smartphones, the ability to get real estate on that phone for the retailer, as part of the POS experience, is critical,” he says.

“Legacy hardware is not going away any time soon; there will always be a requirement to have that as the main POS system,” Henderson adds. “But as we think about our solutions, portability in the form of online ordering and mobile shopping will be part of the mix.” The key is that all solutions are integrated into the overall POS platform and strategy.

Tom Coleman, director of retail dining services at Purdue University, West Lafayette, Ind., is very satisfied with the school’s POS system technol­ogy (it uses the Micros9700 system), especially because it provides data to better analyze business by not only tracking sales but also offering tools for determining operating hours, menu engineering, etc.

“All that data generated at the POS helps us make better decisions,” he says, adding that the system offers dashboard uses to look at sales, with the ability to break those sales down in small increments. Right now, Coleman is building hours for the summer, so he has the ability to go in and look at July 4 to determine staffing needs based on sales data.

While the mobile payment trend may not have as much direct impact on Purdue’s retail operations right now, the idea does appeal to Coleman.

“The mobile payment option abso­lutely does apply to a college campus,” he says. “But for it to have an impact, you have to bring the food closer to the customer.”

Coleman cites the potential of hotdog carts sprinkled throughout campus, where a POS option such as Square would make perfect sense.

“You would have a small device to ring up the transactions,” he says, noting that while there could be some very good opportunities to grow rev­enues, everything has a cost, so you must weigh the advantages in terms of return on investment.

“Cash is not king anymore,” adds Coleman, who admits to almost never carrying cash himself. “It’s a debit/ credit card world. The opportunities for mobile POS technology could be unbelievable over time.”

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