ChannelLife NZ - Turn Smartphones into Mobile POS Solutions

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Turn Smartphones into Mobile POS Solutions

Consumers – even those with little computer know-how – spend hours on their phones doing everything from cruising social networks to playing Angry Birds. But what’s really got solution providers buzzing is the potential for POS penetration through smartphone applications in the small and medium-size business environment.
"The majority of merchants that use our apps are smaller merchants that don’t want to buy wireless equipment that runs up to $500 with an additional monthly fee,” says Markiyan Malko, Program Manager at Merchant Warehouse (merchantwaresolutions.com). "Most of our merchants stick to the mobile device, especially since they usually have some form of smartphone.”
And it’s hard to argue the growth potential. According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 81.1 million smartphones in Q3 2010 – up 89.5% from the 42.8 million phones shipped during the prior year. For the first three quarters of 2010, vendors have shipped a total of 200.6 million units, up 67.6% from the 119.6 million units shipped during the first three quarters of 2009. Additionally, research firm research2guidance reported that the global smartphone application market grew from $1.7 billion in all of 2009 to $2.2 billion in the first half of 2010 alone, which translates to 3.9 billion in the first half of 2010.
"The future of technology is mobile and I think that mobile is going to grow dramatically bigger than the computer industry ever did,” says Babak Kheshti, principal at hugoWREN, a Mac-based consulting company specialising in Apple servers.
How small can it go?
Smartphone apps allow merchants to become much more mobile, which means that they can take their business on the road and make a transaction at the point of sale. They no longer have to wait to make a payment transaction.
The idea of instant payment gratification is driving merchants to adopt mobile payment apps on an as-needed basis for trade shows and cyclical events. The phones can also be used for linebusting during holiday seasons. If a register is overwhelmed, employees with smartphones can ring up customers waiting in line and get them in and out faster.
"There’s definitely a technological revolution going on in the past two to three years,” Malko says. "When I started at Merchant Warehouse six years ago, it was all about dial-up terminals, but the only way you could do tradeshows wirelessly was with a knuckle buster or a pricey wireless terminal. It was status quo for years until POS systems and SaaS-type solutions started coming out. But I think the iPhone was the difference maker. No one cared about mobile apps until the iPhone came out.”
There’s an app for that
With billions of apps available on the market today, it’s safe to say that you have to wade through a sea of clunkers to find the proverbial gem. Luckily, a few app developers are investing in solid applications that are causing a buzz in the retail space.
Merchant Warehouse developed a cross-platform application, MerchantWARE Mobile that runs on Apple, Android, Blackberry and Windows Mobile operating systems. It’s free to install and can be tethered via Bluetooth to a card swipe (not available on Apple devices). Resellers are encouraged to offer the free app as a value-add for customers that have a Merchant Warehouse merchant account. The app is PCI compliant and features detailed reporting.
Another option is from relative newcomer Square (www.squareup.com), which offers an app/card reader program in which a tiny card reader is attached to an iPhone via the headphone jack on top of the phone. Square allows users to take fingerprint signatures, send receipts via text messages, and even has built-in accounting software to track sales and taxes.
A hybrid hardware/software unit that is stirring up some buzz is the PaySaber (www.paysaber.com) by USAePay Solution. The PaySaber is technically a handheld dock that you slide an iPhone or iPod Touch into. It features a thermal printer and a card swipe, as well as an app that lets you control all the different functions of the device. There’s even an option for a barcode scanner allowing the retailer to track inventory. 
Let’s get it started
The big concern for most VARs and retailers looking to move towards smartphone integration is ease of use. No one wants to spend hours installing additional software and hardware, nor do they want a phone that crashes every hour or can’t connect to the internet.
Kheshti tried out dozens of apps, but settled on XSilva’s (www.xsilva.com) Lightspeed Mobile, because of the ease-of-use for his clients. "It’s brought in a huge amount of interest from existing retail stores who want to sell, like the Apple Store,” says Kheshti, who is considering establishing a second company solely based around selling Lightspeed POS.
"My customers simply went into the Apple app store, downloaded the application and were able to get up and running in five minutes. In some cases, I wasn’t even involved in the process. They just did it on their own.”
Since the concept of a smartphone is still fairly new, there is apprehension from some retailers that they aren’t as secure as an actual computer, but app developers are ensuring that card data never actually makes it into the phone.
"About 80% of the card readers in the U.S. encrypt the data right in the read head, and we can decrypt that on our gateway,” Malko says. "So essentially the smartphone never sees the actual card data coming through it – it’s encrypted the whole time.”
Many companies are offering a mobile app as a free perk to owning the full-featured POS system. Most of the apps allow retailers to process a traditional invoice, complete a credit card transaction, and e-mail a receipt to the customer, which means that the retailer never has to touch a computer at all.
If the customer wants to pay by cash or check, the transaction has to be completed at a traditional POS station, but the app allows the retailer to start the sale on the mobile device while interacting with the customer.
Lightspeed allows the user to check inventory and re-e-mail a receipt to a customer if they didn’t receive it the first time. The best part is that the software provider can easily push updates through the app store, allowing the retailer to upgrade the smartphone app wirelessly or via a simple synch to the computer.
"Considering how young mobile is overall, compared with all the technology in this industry, I think it’s pretty impressive how far we’ve come in such a short amount of time,” Kheshti says.
"I think we are getting very close to the point where retail stores will open where every employee will be given mobile devices to put in their pocket and there will be only one backend machine in the store that will deal with inventory. Everyone will hold a smartphone and there won’t be a cash wrap anywhere in the front of the store.”
(Source: text reproduced from http://vsr.edgl.com/reseller-stories/Turn-Smartphones-into-Mobile-POS-Solutions57029, written by George L. Koroneos, 9 Dec 2010)

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