The Future of POS

The point-of-sale and payment industries are experiencing a major transformation.

The Origins of Point of Sale

Point of sale has undergone an evolution that mirrors the progression of many other types of technology toward simple, seamless, and mobile solutions. POS can be traced back to mechanical cash registers in the late 19th century, which varied in levels of sophistication over the years. For instance, the initial purpose of the cash register was to prevent employee theft or embezzlement by requiring the employee to process sales through the register, which would then ring a bell (hence, the term “ringing up a sale”) as the cash drawer slid open to allow for sorting money and making change. Obviously, these machines were very crude in comparison to today’s POS systems, but they helped to pave the way for more advanced devices. As merchants realized the potential applications for point of sale, technology systems began automating certain tasks and keeping accurate records of sales transactions.

The next move forward in POS technology was the transition from mechanical or analog cash registers to digital cash registers. These machines are still used in a number of businesses throughout the world, and the only advantage they hold over their mechanical ancestors is the ability to program keys for certain tasks and make more advanced calculations, often with less input from the user. Businesses might choose to program certain keys for each of their products and services, which allow the user to add the product or service’s price to the customer’s tab with a single keystroke. Additionally, digital cash registers will typically calculate taxes and other fees based on a programmed amount. Although some mechanical cash registers had receipt printing capabilities, digital cash registers made receipts a standard to increase employee accountability and reduce instances of fraud.

IBM Reinvents the Cash Register

In the mid-1980s, POS technology experienced a significance change with the advent of IBM Retail Store Solutions. For nearly 100 years, POS had been run via mechanical and digital cash registers, but IBM set out to revolutionize this technology with the recent invention and availability of personal computers. IBM Retail Store Solutions included a number of retail POS hardware and software products that have been in use for over 30 years. These products have allowed large retailers to track sales operations like never before with extensive inventory management and reporting. They also set the foundation for the emergence credit cards by giving merchants integrated card swiping capabilities, which would inevitably increase consumer traffic and transactions.

Physicist Niels Bohr once observed, “Technology has advanced more in the past thirty years than in the previous two thousand.” Bohr died in 1962, but his words still hold immensely true. Since IBM’s unveiling of its Retail Store Solutions, technology in general has advanced light years. Perhaps the most obvious move forward has been in the move from desktop computing to mobile computing in the form of smartphones and tablets. Apple has been a pioneer in this realm, and toward the end of the first decade of the 21st century, a new crop of POS platforms emerged that has, once again completely changed the landscape of the industry. Although the fundamentals of the technology behind mobile POS solutions have not changed all that much from the technology introduced by IBM, mobile POS has revolutionized the concept of POS by giving smaller merchants access to the same basic technological capabilities of enterprise level POS systems.

Point of Sale in the Mobile Era

Leaders in “micro merchant processing”, including Square, Intuit GoPayment, Paypal, and Verifone, aim to empower smaller merchants with the ability to accept credit cards in a mobile environment without the trouble of applying for a traditional merchant processing account. Merchants can typically sign up for these services online with minimal personal information (usually a name, address, and last 4 digits of a social security number will suffice). Once merchants have signed up for the service, they can start taking credit cards as payment directly through a software applications and a simple card swiper that plugs into most modern smartphone devices. Effectively taking the place of traditional credit card terminals that integrated with older systems like IBM’s POS software, smartphones equipped with card swipers are now providing micro merchants with a basic POS functionality without the hefty price tag of traditional POS software.

Alongside the developers of micro merchant processing apps, others saw opportunity in the gap between these minimal smartphone terminal devices and the desktop based systems that many retailers are still using today. Leveraging advances in cloud technology, companies like Vend and Shopkeep began developing web and tablet based systems with increased functionality over micro merchant processing systems. These apps offer small retailers a cross platform, easy-to-use solution that is also capable of mobile transactions. Hosting all POS data in the cloud allows business owners the flexibility to manage their business from a remote location and eliminates dependency on a specific piece of hardware. This means that merchants can now supply their own POS hardware (typically an iPad, Mac, or PC) without having to worry about their data being tied to that specific device. Cloud technology has liberated merchants from the fear of hardware failure and loss of data, since cloud storage is more reliable than local storage.

The Next Generation of Customer Experience

Although micro merchant processing systems and cloud based solutions have provided small merchants with revolutionary POS alternatives , medium, large, and enterprise businesses are struggling with antiquated technology that has changed very little for this demographic over the past 30 years. Hence, the market for larger business is ready for a transformation, and the change will be significant. Envision an omni-channel experience that utilizes 100% mobile and cloud based systems, including integrated mobile payment, security, and back office management. Innovations will change the buying and selling experience through mobile front end operations, automatic purchase orders, seamless promotions, augmented reality experiences, customer preferences, and much more. To paint a better picture, here’s how the next generation of retail customer experience might look…

A community driven unified mobile app that customers will download to a smartphone device and use to define their preferences, link their credit cards or other payment methods, and connect with family and friends via social networking. Customers will then be able to shop online or in-store with this single app where all purchases will be made instantly with the tap of a button. When the customer is shopping in-store, he or she will be recognized via their app profile, which will help guide them toward products they have shown interest in and would likely purchase. When the customer is finished shopping, there will be no need to go to the traditional checkout counter, as all purchases will be made through their mobile device with the credit card(s) they had previously linked.

For larger and high-end retailers, this experience will be further enhanced through the use of augmented reality and 3D printing technology. In an era of hyper globalization and economic crunch, many retailers will begin seeking ways to sustain profitability and stay competitive with the likes of Amazon, eBay, and other ecommerce marketplaces. One way that augmented reality might aid in this is by migrating to an order-to-deliver system that would decrease the overhead that affects their bottom line. Augmented reality will allow large retailers to open up “Experience Centers” with technology that would give customers the ability to virtually experience a product in person before purchasing it. Upon making a purchase, the products that the customer ordered would be shipped directly to his or her home, or to the retail location for pick up at a later date. This will bridge the gap between traditional brick and mortar retail and ecommerce marketplaces, which gives high-end and larger retailers an advantage in coming years.

Augmented reality via “Experience Centers” will give companies the opportunity to launch new product lines by gathering the opinions of authentic customers. Traditionally, surveys have been the way to harvest consumer market research, but with augmented reality technology, a product development department could create a virtual line of products to showcase to current customers at an experience center. This would cut down on development, testing, market research, and points to a new form of consumer empowerment. Indeed, every aspect of this new customer experience is designed to give consumers enhanced and behaviorally targeted advertisements. This idea of consumer empowerment is already evident throughout social media channels, and it will be a driving force in the next generation of customer experience. Putting the marketing controls in the hands of the consumer will generate more accurate data about spending habits, preferences, and interests, rendering marketing efforts more targeted and cost effective for retailers.

A Revolution in Efficiency & Automation

New advances in medium to enterprise POS technology will increase efficiency and provide detailed marketing insights. For instance, the unified mobile app that retailers will offer to customers integrates fully with inventory management and reporting in the POS platform. This allows the system to generate automatic alerts and on demand purchase orders for products that are low in count, eliminating inventory inefficiencies. In addition, this will give retailers a method for tracking consumer shopping habits like never before. Older systems have required manually generated reports of purchases to gain insight into consumer trends. Revolutionary POS technology will generate real time purchasing data with detailed customer information in the cloud.

Increasing employee efficiency will also be another goal of the next generation of cloud based and iPad POS technology. No matter the size of the business, employee training is always an investment of time and capital that must be taken into account. Teaching employees how to use the front end of the POS is one part of this training process, which will become more efficient through the implementation of intuitive software systems. Other parts of training can will include brand and product education, which may be enhanced through the use of augmented reality. Giving employees the means to virtually experience and study a new product before launch via augmented reality will make the time from production to launch much shorter. Instead of waiting for the physical shipment of the product line to hit the store, employees will be able to learn the specifics of the new products before they are even being manufactured, making them more equipped than ever the sell the products when they do hit stores.

Making the Dream a Reality with iConnect

This all may seem like a distant dream, but anyone in the industry knows that it is, in fact, on the verge of becoming a reality. As technology progresses forward and tests the boundaries of possibility, so too will retailers demand new ways to connect with their customers, increase internal efficiency, and gain further insight into what it will take to obtain competitive advantages in the 21st century. This could be as easy as knowing what your customer wants before they even set foot in your store, or being as complicated as restructuring the brick and mortar business model to leverage augmented reality technology and provide a virtual order-to-deliver shopping experience. Whatever the case, it is evident that it is time for a major transformation. Large-scale retailers are seeing the success of micro merchant and cloud based POS solutions, and it’s clearer now than ever that mobile technology yields big benefits for early adopters. The design, development, and marketing teams at iConnect are leading the way for retailers across the globe with an integrated, intuitive POS solution. This is, indeed, the way of the future of retail software systems.

By Subodh Gupta, Founder, iConnect

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