They say hindsight is 20/20 which is to say that we don’t always see the moment for what it is when we’re in it. That concept especially rings true when it comes to payment processing technology for small to midsize businesses.
We’ll discuss some of the technologies that retail and restaurant operators used to update their credit card processing and POS systems and increase efficiency and customer satisfaction in the recent past, and what technologies business owners should be looking toward today.
The 1990s was a transition period from old school cash registers to the new computer-based point of sale (POS) systems and high-tech electronic cash registers. Checks were the most popular payment type for the better part of the decade; and check verification devices were all the rage. Credit and debit cards were gaining traction, but checks kept the top spot as the preferred method of payment.
Checks finally gave way to debit cards usage in 1998; Leading up to that transformation, savvy merchants began to throw out their old credit card imprinters, not-so-affectionately called “knuckle busters,” in favor of credit card terminals. Terminals greatly simplified the credit card payment process for merchants and consumers alike, since merchants no longer had to spend valuable time manually imprinting credit cards and making hand written receipts.
In the next decade, credit card terminals began to give way to the integrated POS system. The early POS systems of the 90s gave merchants the ability to do things that weren’t possible with old cash registers and credit card terminals. With an integrated POS system, merchants could get rid of the credit card terminal and process electronic payments directly from the POS. That greatly simplified the reconciliation process by making it unnecessary to keep a separate total for credit card transactions and another for cash and checks. Additionally it gave merchants the ability to perform back office tasks, get instant transaction reporting, and employee management tools.
Technologies that increased transaction speeds and customer convenience were the focus during this period. High-speed internet was a huge improvement over the phone line for submitting transactions to the approval network. In addition to increasing the transaction time, it also freed up the phone line so merchants weren’t faced with the choice of paying for two phone lines or having constant conflict between the availability of the credit card terminal and the phone.
Let's take a look at the current trends that are driving business owners to increase efficiency and customer satisfaction today.
Integrated point of sale (POS) systems and electronic cash registers are the norm in most businesses today. They provide merchants with much more than the ability to accept credit cards quickly and efficiently. They also perform functions that help merchants operate their business like employee scheduling, data analysis and capture, inventory control and more.
But that doesn’t mean that merchants or consumers are content with the current norm. Consumers are demanding even more convenience, and security is top of mind for everyone in light of rampant data theft that is plaguing businesses and consumers alike. Many of the sought after technologies satisfy both demands: convenience and security.
Some of the hottest new payment types use mobile technology to make purchases as convenient as making a phone call. With wide-spread mobile phone usage across all age groups, mobile payment technologies are catching on and growing in popularity quickly.
Most mobile solutions are inherently more secure than standard credit card transactions because they reduce or eliminate card handling and keep cardholder data safe throughout the transaction. Mobile technologies are changing how consumers interact with merchants, and how merchants reduce bottlenecks during high-demand times. Plus, shoppers are now using their phones before, during, and after their shopping experience which has merchants acting quickly to have a presence online via ecommerce websites, social media, and in-store mobile promotions.
Tablet based POS systems
Consumers aren’t the only ones looking to go mobile. Tablet based POS systems are making huge gains in the marketplace. They ditch the old model of desktop POS systems that are not portable and take up a lot of counter space in favor of sleek, streamlined, and most importantly, portable tablet devices. These systems typically pack as much punch as a traditional POS system, but are light and have a small footprint. Merchants can swipe credit cards through card readers that plug into the USB port.
One of the most anticipated and talked about technologies emerging today is EMV, which is a secure technology for processing chip-based credit cards. Chip cards, also known as “smart cards,” are credit cards that have sensitive cardholder information embedded in a data chip in the card, as opposed to traditional credit cards where the data is stored in the magstripe on the back of the card. An EMV-enabled device must be used in order to read the chip on these cards and process a payment with EMV technology.
EMV technology increases card data security mainly by making it virtually impossible to create counterfeit cards, and by requiring cardholder authentication that verifies that the card belongs to the person using it. Banks and other credit card issuers are currently issuing these chip cards to cardholders en masse. Considering that the card associations will soon be shifting the liability on card-present fraud to merchants who do not use EMV technology to process them, many merchants are looking to add EMV-enabled terminals to their systems.