November Newsletter

The quixotic US decision to implement chip and signature gives a good excuse to show this video of Americans buying stuff by drawing pictures of cats on touch screen payment terminals. Only in America, of course, as the head of NRF discovered when he tried to use his signature card in London.

Interesting innovation

Reductions in Interchange and consequent cuts in credit card reward programmes leave space in the market for rebooted store cards. The good news is that issuing cards just got easier. Marqeta aims to “democratise” this market with a developer friendly platform that allows any business to set up its own Visa or MasterCard- badged payment cards. Take a look at the Kabbage Card as an example of what’s possible.

3D Secure has been annoying shoppers and merchants ever since its introduction in 2001. One possible alternative comes from New Zealand start-up MyPinPad, which would like to replace your 3DS password (which you’ve probably forgotten) with your payment card’s PIN (which you probably haven’t).

On a similar theme, Oberthur is commercialising payment cards with dynamic CVV codes that change hourly. BNP is said to be running a trial although I would hope that biometric authentication via mobile will soon make both 3DS and CVV largely redundant.

In-store analytics

In-store analytics is hot right now as digital natives begin to take control of retail operations and despair at a black hole where they expect KPI’s to be. Simple footfall monitoring, for example, is no longer sufficient and it was good to see retailer Dune adopting a Walkbase solution based on Wi-Fi analytics and video monitoring.

“As well as tracking transactions of all visits, we can now use transactions per engaged visits as one of the key performance indicators for our store teams.” – Zoe Owen, retail sales director at Dune Group

Analytics don’t need to stop at the shop door. Facebook announced a new product that will provide retailers summary demographics for people passing nearby including how many have seen a particular advertisement online. The challenge with these services is not the technology; it’s going to be to recruit/retain enough clever people to do something useful with the data.

Square heads for the mid-market

Square’s IPO has been well covered elsewhere but I was intrigued by these two graphs showing that the US business has steadily been moving away from its initial audience of micro-businesses. There’s no money in that part of the market. Instead, it has quietly gravitated towards serving more established, larger retailers although its one brush with the enterprise market didn’t end well. The processing contract with Starbucks has been terminated amidst much red ink.

Square revenue by customer sizz

Square losses on Starbucks contract

While Square had a revolutionary product for the little guys, as it moves up-market it is pushing up against more established competitors (such as Heartland, see below) who have been given plenty of notice to up  their game.


SmartPOS is the new way small retailers are buying technology – as a bundle of ePOS software, in-store hardware and fully integrated payment services. With Clover, First Data has one of the most complete solutions including an app store. I’d been wondering what manner of apps retailers would find attractive. According to First Data, the most popular app is Homebase which helps businesses manage their employees.

Heartland is another payment company moving into ePOS. It bought Digital Dining (a restaurant specialist), bringing to 100,000 the number of locations served by the string of small ePOS vendors it has acquired. The strategy is to cross-sell payments to the new customers but there is a risk Heartland will find itself saddled with a portfolio of difficult to maintain and non-compatible software applications.

A less risky alternative to commercialising ePOS software is to deploy more sophisticated payment terminals that can subsume some of the functions of a traditional PC-based till system. First Data are doing this too, with Clover Mini, but the smart money is backing Poynt, a start-up that has raised $28m with a promise to start shipping this quarter. Its cool looking terminal (shown below) runs on a modified Android operating system..

Poynt payment terminal

Omni-channel retailer needs omni-channel vendors

The crashing together of store and e-commerce technologies continues with the ambitious Payworks, a German cardholder present payment gateway making two interesting announcements. Firstly, it has commercialised an easy integration with e-commerce platforms so that shops can sell direct from their website using a chip and PIN machine. This is actually more innovative than it sounds. Payworks has also announced an integration with Stripe which will be attractive to app vendors making their first forays into physical retail and allows Stripe to position itself as an omni-channel payment service.

In enterprise, WorldPay quietly announced that it was partnering with Wincor to add integrated in-store payments for its large retail customers. The link takes you to an unofficial clip from its customer conference; you’ll find nothing on the web concerning the partnership. On similar lines, but more widely publicised, Cybersource and Verifone have partnered to produce a solution called Omnisource.

Wallet wars

The first anniversary of Apple Pay’s launch was met with some disappointment that the service hadn’t been more successful. The slow roll-out of contactless payment terminals in the US hasn’t helped but the international expansion has been slower than many would have liked. The UK is up and running but an announcement of five additional markets is with Amex only.

One innovation that comes with iOS9 is the integration of Apple Pay and loyalty cards within the Wallet app. Walgreens is the first merchant to provide this but the customer experience is less than elegant. First you tap for the loyalty card. This tap pushes the bill to your phone with any discounts/offered applied. Then you tap a second time for Apple Pay to work.

Meanwhile, Samsung Pay launched in the US at the beginning of October and reported an impressive average of eight transactions per user in the month.  Samsung Pay works on more payment terminals than Apple Pay as it spoofs the magnetic strip if there is no contactless pad to tap.

Retail Week Payments conference

Retail Week hasn’t run a conference on payments since the initial introduction of chip & PIN in 2005. At that time, all retailers wanted to learn about the same topic. Now, the diversity of presentations showcased the wide variety of challenges facing merchants today but also the challenge to conference organisers of programming a full day that keeps all delegates interested.

geoff tweet

I made the keynote presentation that you can see here. More interestingly, Subway showed that integrating card machines with till systems saves time and sells sandwiches. Green Man Gaming revealed that Bitcoin sometimes accounts for as much a 17% of sales value. This was the first positive Bitcoin case study I’ve seen but I’m still a sceptic.

Store of the future

It seems increasingly likely that the store of the future may contain no technology at all, at least none visible to the shoppers. Amazon – who have done their homework – made a first foray into physical retail that looks at first sight like a standard shop. All the smart stuff (including checkout) takes place on the customers’ phones, not on the store’s own systems.

Exhibit two is this thought-provoking video from Retail Week’s John Ryan, looking at the future of store design. Nobody mentions technology. Nobody. It’s all about lighting, sightlines and visual merchandising. Tech vendors need to learn to speak this language.

Finally, read RSR’s note “Why bringing digital into stores won’t work” which argues that under any viable staffing level shop assistants will be too busy folding clothes or bagging up click and collect orders to make use of any technology their employers provide. Unless you’re Apple, in which case different rules apply.

ePOS is back

Long in the doldrums, the enterprise ePOS market is picking up as retailers realise that they need both to invest in their stores and to integrate them fully with their e-commerce operations. Credit to George Lawrie at Forrester for producing the first POS Wave for some time, and more credit to Demandware for making it available free of charge.

Notable changes to the leaderboard include: Aptos (formerly known as Epicor) leading the pack; e-commerce giant Demandware making a new entry following its acquisition of Tomax, and Oracle slipping back as its inability to explain its roadmap begins to hurt. The newly reinvigorated Aptos has been quiet about its international expansion plans but must be considering a stronger partnership with BT Expedite, which holds European rights to most, but not all, of its software.

Forrester POS Wave

The mid-market is strong too. Sanderson said that it expected full year revenues (pdf) to be up 15%, and that sales at its OneIota business would grow an impressive 75%. OneIota specialises in bringing enterprise software to life on customer-facing store technology such as the iPads at SuperDry. Its acquisition is looking to be a smart move from Sanderson.

K3’s retail division reported full year revenues up 18% (pdf) as its mid-market fashion customers continued to spend on software upgrades.

Elsewhere, there’s still no sign of the new tablet-based ePOS vendors gaining traction in the mid-market. BT Expedite (Aptos) has won at Hobbs (replacing Prologic) and Futura at 99p Stores, replacing a DOS based Torex system.


Transaction growth boosts First Data’s European merchant facing businesses

First Data’s Q3 results for its EMEA Global Business Solutions division showed sales up 6% in local currency terms due to increased transaction volume. However, revenues were down 8% when translated into dollars and year to date turnover is 7% below 2014’s level.

First Data Global Business Solutions EMEA Q3 15