Interview with Jean-Marc Thienpont, EVP of Mobile Solutions, Ingenico and COO, ROAM
Q: What are the problems that mPOS solutions solve for micro and small businesses?
Mobile point of sale (mPOS) solutions solve a number of common issues for micro-merchants and small businesses, while also presenting a number of new opportunities. Today, more than half of small merchants still have no means of accepting credit cards, so mPOS can be an easy and affordable entry point for merchants to start running card-based transactions. This enables them to increase sales, avoid the high fees associated with accepting cash, improve security, and increase business efficiencies by leveraging an automated system.
mPOS also presents some exciting opportunities for merchants to enhance their relationship with customers. Leveraging an mPOS solution that integrates value-added services such as loyalty programs and real-time offers enables merchants to stay connected to their customers, interact with them in new and meaningful ways, and ultimately drive more revenue for their business. And, by enabling merchants to be truly “mobile”, they’re now able to sell outside of their store walls – whether through pop-up stores, farmers markets, food trucks, etc. – and reach a broader market that they never had access to before.
Lastly, mPOS is enabling merchants to combine payment acceptance and business tools into one single solution. Merchants now have greater access to the critical data and analytics that can help them run and grow their business – i.e. customer purchasing history, inventory tracking, order management, store traffic, etc.
Q: The world of mPOS is becoming very complex and is changing quickly. How do you see major drivers that shaped this market in 2013 and what can we expect in 2014?
I think that some of the biggest drivers shaping the mPOS market are the need for convenience – both on the merchant side and consumer side – and the demand for an optimal customer experience. Merchants want a streamlined, integrated mobile payment solution that allows them to better serve their customers – both in-store and out-of-store – that goes beyond just payment acceptance. Merchants are demanding broader business applications, where payment acceptance is just one component.
On the flip side, consumers are becoming increasingly tech savvy and are using mobile apps to manage all aspects of their everyday lives. As a result, they’re expecting to use this technology wherever they shop, eat, and spend money. mPOS is helping merchants meet these consumer expectations, while improving the experience for both parties.
My predictions for the remainder of 2014 are that mPOS will continue to move upmarket into higher merchant tiers and the uses cases will become much more diverse and complex. A lot of these new use cases will become more relevant as mPOS expands into new geographies. We’ve started to see a growing demand for mPOS in markets around the world, and I believe this is only going to accelerate throughout the remainder of 2014 and for years to come.
Q: What do you think, who will drive the mPOS innovation at point of interaction: existing or innovative players? What type of mPOS providers will play key roles in the mPOS World in 1-3 years?
It’s not one or the other, but a combination of the two. The players that will have the greatest impact on this market will be the existing payment solution providers who are not only innovative, but nimble enough to adapt as this market continues to evolve. A lot of the new players that have emerged understand the importance of having a consumer-oriented approach with simple interfaces and a strong emphasis on user experience. While these are critical components to user adoption, many of these new players lack the deep know-how and payments expertise that are key to success in this highly complex market. In addition, many of these new players lack the financial stability and infrastructure that’s needed to successfully roll out mPOS on a larger scale.
In the next few years, I think the mPOS providers that will play key roles in this market will be the providers who can go beyond mobile payments and offer a seamless, multi-channel solution combining mobile, physical, and online transactions. From a merchant perspective, this allows them to manage their business through one centralized system, while having multiple touch-points with their customers. And from a consumer perspective, this will enable them to have a streamlined user-experience no matter how they choose to interact with a merchant, which is a very powerful thing.
Q: Could you please compare the state of mPOS implementation and adoption by micro and Small merchants in the US, Europe and Asia?
mPOS implementation and adoption in the U.S. is about two or three years ahead of both Europe and Asia. A major factor for the market maturity in the U.S. is the fact that they have a much simpler payment method than the rest of the world. I would say that both Europe and Asia are still in pilot mode right now and are carefully evaluating the market while trying to identify the right business model. Europe, in particular, is trying to duplicate the payment terminal business model when rolling out these mPOS “pilots”, and I believe that this is not the best way to address the market, especially with the added complexity of EMV (i.e. chip and PIN). Although Asia is also in pilot mode and evaluating the business models, I believe that once they start to roll out mPOS on a broader scale, the market will accelerate at a much faster pace than in Europe. This is largely due to the fact that the POS penetration in many Asian countries is far lower than in Europe.
Q: How do you see banks positioning themselves in the mPOS World? What are the challenges to acquirers to successfully seize the opportunity?
In the U.S., many banks are seizing the opportunity and have already started going to market with their own mPOS solutions. Most of these banks are positioning themselves as mid-market mPOS solution providers rather than trying to address the micro-merchants, where the market is already very saturated. These banks have already established a sense of trust with their small-to-medium (SMB) business customers, and are leveraging their ability to provide multiple business services and solutions outside of just mobile payment acceptance. Banks in Europe are also starting to capitalize on the mPOS opportunity, but are much more focused on marketing their ability to offer merchants a low-cost payment acceptance device.
In order for acquirers to successfully seize the mPOS opportunity, they’re going to have to move away from a pure payment approach and start focusing on a comprehensive business approach. The real value that an acquirer’s mPOS solution can bring to a merchant will not be limited to the payment processing and transaction acquiring services, but also around the business analytics and value-added services that mPOS can provide. This presents both a challenge and an opportunity for the acquirers, as they will need to understand and communicate the full business value of their mPOS solution in order to drive merchant demand.
6. Can mPOS be profitable? How to monetise the investment in mPOS?
Yes, mPOS can absolutely be profitable as long as you target the right market and offer the right capabilities. I think that one key is to provide a solution that addresses the needs of higher tier merchants and SMBs that have steady transaction volume. Going after the micro-merchants who run the occasional mobile transaction has proven to be an unprofitable business model.
And as I’ve mentioned previously, it’s extremely important to be able to offer a comprehensive solution that enables merchants to accept transactions through multiple channels – i.e. mobile, online, and face-to-face. This not only streamlines merchants’ business operations, but it also allows them to reach new markets, stay connected to customers, and drive more sales. My prediction is that the players that are able to successfully build, market, and support this type of multi-channel solution will be the ones that come out on top.