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A growing population, rising incomes, urbanisation, the advent of modern retail, and a consumption-driven society present tremendous opportunity for growth for the payment technologies industry.
Payment solutions: then and now
The payments industry is continuously seeing rapid growth and technological advancements as the market demands are increasing. The payment industry is utilising new technologies to become more dynamic, efficient and cost-effective. The industry is rapidly reaching a point where competition will centre on innovations in technology.
Unlocking the Challenges
Before the new age innovative Point of Sale (PoS) systems were introduced, payment processing was a long, tedious and cumbersome process. Payment is a unique opportunity where retailers can make a connection with their customers. Lack of PoS systems affected customer service adversely. Multiple bank EDCs were required by the cash counter to process respective bank cards. This led to a lot of clutter and slowed down the payment receiving process. Plus, there were dial-up charges for each EDC terminal. Transaction speed was slow as the cashier had to make a manual data entry and hence increased chances of human error. In contrast, the innovations in the PoS system are cashier friendly, and require less training. A PoS system automatically selects the minimum cost transaction route. In the traditional set-up, reconciliation and settlement were a nightmare for the retailer.
Positive PoS Strides
PoS solution providers are now creating a conducive environment for retail and enabling the service sector to grow. The edge lies in reduced cost of transaction processing, reduced cost of training of cashiers, opportunity to offer gift cards or offer loyalty programmes without incremental cost in infrastructure.
Benefits for SMEs
PoS solution providers provide SMEs with a competitive advantage through the enhancement of customer service. A PoS solution can give them the strategic edge to meet challenges posed by their bigger competitors. Due to their small size and constraints in skill resources, SMEs often fail to expand offerings like loyalty or gift cards. PoS vendors can facilitate hosted service, which means that SMEs gets customised solutions without having to commit to expensive infrastructure or to an in-house team to manage the program.
The innovations in the system enables retailers to avail benefits such as reduced costs by primary use of free internet for transaction routing, streamlined cashier operations with a single EDC for all payment types (credit/debit/gift card/loyalty card/mobile currency) and all banks, safeguards against human error. There is an increase in transaction speed as a cashier only swipes the card, and data entry is not required; there is an increased redundancy to ensure successful transactions with multiple links to bank servers, increased control at HO, automatic reconciliation and rich insights into customers card preferences. Banks get a streamlined auto reconciliation of the accounts with the retailers. Plus, banks can offer instant financing through PoS systems in form of EMI. An end to end solutions with hosting facility, makes the job of IT manager and CTO much easier.
New PoS solution for faster, efficient transactions
A modern PoS solution facilitates much more than just transfer of money from one account to another. It facilitates not only a redundancy at every step of the payment process but also specialised MIS / specialised information. With the lack of a PoS solution, retailers face various challenges in maintaining a smooth transaction process. With hundreds of transactions occurring on a daily basis, it is critical to maintain a fast-paced yet error-free customer interface process. Post the transaction scenario, the merchant is still required to collect the money from the bank to close the transaction. It is here that the merchant faces a different kind of challenge. Generally, the bank pays the merchant for all card transactions within a stipulated agreed turn-around time. Still, there is the possibility that the bank payment and the merchants accounts may not match. Manual reconciliation was difficult since most of the banks provide Payment Advice as hard copy. Moreover, the entire reconciliation process was manual, wherein cashiers were required to manually match the payment received against each credit card transaction. Since transaction archives are not available for card transactions, it is not possible for merchants to search / make queries about the transactions. This leads to a lot of manual work / transaction management. The modern PoS solutions give merchants a faster and efficient transaction processing experience.
A new age PoS solution can facilitate rich MIS on:
1. Central aggregation of credit card transactions--transactions from all PoS terminals are all stored / archived in a central server. This will help the merchant to perform search and query functions as well as help the merchant in the transaction reconciliation process.
2. Facility to upload bank Payment Advice file
3. Automatic bank reconciliation and transaction dispute management
4. Financial closures
5. Proactive alerts for better operational efficiency
What is in store for the industry?
Over the next 10 years, several possible scenarios could set the stage for emerging payments technologies--innovative mechanisms like online, mobile and prepaid card payments--to redefine the payments technology landscape. With FDI in retail, PoS solutions see new opportunities on the horizon. But the key will be innovation.
LOKVIR KAPOOR, CEO, PINE LABS
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