Beyond the swipe: The ubiquitous PoS machine will soon become intelligent

Deployers of point-of-sale terminals are rethinking the way business is done

Until recently, it was difficult to get merchants to accept point-of-sale (PoS) terminals, because there were benefits to be had from non-use: sales numbers, for example, could be suppressed with clever book-keeping. Moreover, deployers were also unable to market the proposition to merchants that were outside the big retail chains, malls, hotels and restaurants, because they were reluctant to bear the cost of PoS installation when the footfall didn’t appear to justify it. 

“Phones have become ‘smartphones’, and TVs have become ‘smart TVs’. Everything is becoming smarter, but we mostly have dumb PoS terminals at outlets,” Manish Patel told Business Standard in May 2020. The founder and managing director of Mswipe Technologies was making the point that terminals would have to mutate from mere swiping interfaces into the bedrock of an intelligent information network.

What has changed lately is the big bet on the $700-billion local retail sector, 90 per cent of which is made up of neighbourhood kirana stores. Smartphone adoption and low-cost data plans have made it easier to on-board them digitally. This has given a fillip to new-age PoS machines which operate on Android and offer affordable all-in-one solutions to merchants. The pandemic has made more folk aware of the digital route. In-store shopping is back this festive season, and the spotlight is on smart PoS terminals.

Smaller merchants had a bigger worry — they had no access to capital, especially those with a monthly turnover of Rs 200,000-500,000. “Very few banks and the larger NBFCs (non-banking financial companies) cater to them. Also remember, such financing is unsecured in nature, and the skillsets needed to underwrite risk are very different,” says Rohit Agrawal, chief executive officer (CEO) of Mcapital — the captive lending arm of MSwipe Technologies, the largest deployer of PoS units in the country.

Mcapital’s credit is not cheaper. It’s in line with the market rate (at a high of about 28 per cent) on offer from banks and NBFCs. But what works for merchants with Mswipe is that they get credit, minus the processing bureaucracy. And the firm can customise credit, as it has visibility on the traffic (transaction volumes) on the PoS machines.

It’s a killer financing combination in the PoS market, and others like AGS Transact are also toying with it. Many fintechs may also enter this business in the months ahead and work alongside PoS deployers — or, if not, as standalone financiers; it feeds into their larger play of servicing micro, small and medium enterprises. But the Reserve Bank of India’s recent guidelines on digital lending have forced them to pause.

No longer a dumb machine

The big deal is backward linkages. “What merchants are looking for today is beyond payments, as they prefer a full-service offer covering — in-store, online and omni-channel acceptance and value-added services from a single PoS device integrated with their ERP software,” says Ramesh Narasimhan, CEO, Worldline (India). And by far, one of the biggest value propositions is inventory software.

“It automatically creates replenishment needs for the merchants and suppliers. This data can not only be used for replenishment of the inventory, but also by suppliers of the merchants,” notes Narasimhan. Worldline’s Android PoS terminals and SoftPos capture sales that are linked with the inventory at the backend.

Kush Mehra, chief business officer at Pine Labs, gushes that this festive season is a blockbuster: “Look at buy-now-pay-later, which is thriving with nearly 20 segments, the latest being the addition of the wearables category.” If shoppers love the convenience of opting for a digital pay-later option and that collateral-free EMI conversion happens within seconds on PoS terminals, it’s because, at the back-end, there’s a lot happening as well.

Take Pine Labs. It is “not in the business of seeking collateral as we don’t lend on our books. We deliver robust, secure, and speedier PoS terminal interfaces using which our merchants can operate their businesses with ease,” says Mehra. “Our smart Android-powered PoS terminals offer an integrated and unparalleled apps ecosystem which is built in to help merchants manage different aspects of their business operations. The availability of apps like Vyapar help keep track of inventory for single or all connected stores.”

Simply put, a largely merchant discount rate-driven business is now more on inventory management systems and book-keeping platforms on Linux and Android-PoS. This will feed into the supply chains, and each entity on it can, with the data pulled from PoS and the new management tools, know exactly what sells where. Optimisation of production and capital savings are big gains to be had as well.

The game is changing

The game is changing even at fuel stations. Oil marketing companies are leveraging technology to benchmark customer experience at the forecourt with the non-fuel retail segment. “In fact, the future of fuel retailing lies in tracing and tracking their customers,” notes Ravi B Goyal, chairman and managing director, AGS Transact Technologies. Its ‘Ongo’ PoS terminals deployed across fuel outlets offer an industry-first integrated payment solution. It removes manual intervention, bringing added transparency in the fuel payment and the management process.

“These PoS terminals are equipped to accept all popular modes of digital payments such as the UPI and tap-and-pay, run loyalty programmes, and integrate various analytical and monitoring applications which enable these outlets to optimise their resources and enhance the customer experience,” adds Goyal.

What we are witnessing in the PoS terminal market is merchants paying a flat, monthly subscription, and using the machines in whatever way they want. The popular notion that merchants gain only from transaction processing is history — thrown in are checkout finance, EMIs and a plethora of applications that helps in making the business better, as well as access to loans.

Partnerships never imagined before are on. Mswipe has teamed up with small and mid-sized software houses. This takes care of merchants’ inability to find an effective distributor countrywide for their apps. Also, while they could use the Google Playstore to distribute their apps, they still didn’t have complete integration. For example, a restaurant will have to get the app integrated and a barcode to print the bill. Mswipe has all this built in as a plug-and-play to an app developer.

That the PoS game has to change was flagged by Scott Ellison, then senior director of corporate strategy and head of market intelligence at PayPal, in his 2013 paper, The Future of PoS: Evolution and its Impacts.

He stressed that the focus has to be on serving the broader needs of merchants beyond PoS, including integration of in-store sensors and mobile devices, to drive customer-product interactions and back-office systems like inventory and supply-chain management. The deeper integration between PoS and back-office systems makes the future of PoS and the future of retail inextricably intertwined.

So, the PoS machine will soon become an intelligent one!