5 minute read

Endless POS-ibilities

Martin Herlinghaus, Director of Corporate Development at Aevi, describes how payments orchestration can empower merchants in and out of store

We feared we were watching the end of in-person commerce in 2020. But nothing could be further from the truth, according to specialist in-person payments solution provider Aevi, which is busier than ever, ‘digitising the last mile’ and bringing e-com flexibility to the world of POS.

So, if it’s no longer about the high street versus e-commerce, where is the battleground in payments, and who are the new and emerging players?

THE PAYTECH MAGAZINE: To set the scene, what are the main trends driving innovation in payments in 2023?

MARTIN HERLINGHAUS: Despite the rise of e-commerce, a significant proportion of retail transactions still take place in or adjacent to the more traditional in-person side of the business.

From our point of view, payments, and the checkout process, have become far more personal, customer-centric, and embedded into the customer journey. This means two things. Firstly, the traditional point of sale has become more mobile, and more interactive. And secondly, the role of payments is being redefined.

It’s no longer just about the transaction itself but also seeing how payments data can help you to understand the customer better. This is exciting because it brings new players into this environment – for example, device and ecosystem providers (Apple, Google, etc) and independent software vendors (ISVs), who are building solutions to help small businesses engage with their customers. merchants want to identify the customer across channels, which is where the problem arises, because in-person commerce is not really designed to share data and reveal more of the customer.

TPM: What does it mean to digitise the last mile of payments and who benefits from this in the payments ecosystem?

MH: In the commerce and retail world you will see that the digital and physical channels are blurring. You no longer have e-commerce and in-store payments as two separate things, but a more holistic experience. This requires a different level of flexibility that merchants, both online and in-store, have to present to their customers.

This is where we come in: we want to make in-person payments more open and more programmable. In theory, everybody can be a winner from this, as it’s a systemic problem that we are solving.

In former days, the processor has had to stay with a payment terminal provider, because it was all about efficiency of the payment process and security. Changing providers or integrating new providers into the checkout process is also difficult in different countries, due to different payment regulations. It’s very hard to innovate in this space.

We’re aiming to provide a layer of flexibility to enable the exchange of providers and the introduction of new payment methods. And that’s especially interesting if you have a look at Europe, which is such a fragmented market, where it’s hard for an ISV provider to satisfy the needs of local regulators.

While this is easier on the e-com side, where you have a lot of APIs and a plethora of payment methods, it’s extremely hard on the in-person payments side, because the process is so old and analogue. You go to your point of sale, you check out and that’s it. Nowadays,

In the past, ISVs have also been limited by their back-end providers preventing them from being creative and designing new opportunities for their customers. But now it’s possible for ISVs to exchange those providers and integrate new ones more quickly, giving them the freedom to design the checkout flow as they see fit.

Not only that, but the traditionally minded acquirers and processors can modernise their overall payments estate and bring multiple parts together. Payment service providers (PSPs) from the online world can now jump into in-person commerce and bring their digital expertise to the checkout process. And ISVs can weave their specialty into the physical checkout process as well.

So, the SMEs get better services at a lower cost, and the bigger merchants can now harmonise their in-person and digital commerce, run it centrally, and roll out innovations faster than before.

TPM: How will in-store payments orchestration help businesses and the high street to thrive, even in the light of e-commerce popularity?

MH: SMEs and small retail businesses need to be present in both the physical and digital worlds, so they need to understand their customers better than ever before. Once they do that, on both the digital and in-person side, they can use it to create more personalised and engaging shopping experiences. This could involve sending loyalty invites, offering curbside pickup, or even creating virtual shopping. All things the bigger merchants can offer but it’s now open for everyone.

Ultimately, it’s no longer about high street versus e-commerce. Whether you’re a high street merchant or a digital one, you need both sides of the coin. The physical interaction with your customer is different from the choices you have on the internet. So, you need to play to the strengths of the different channels. People want to buy items online but also exchange them. You need stores to be open for this to work.

Customer and payment data wants to be the same across channels, so you know who they are and what their preferences are, so you can design services according to those preferences.

TPM: How do you see the future of retail, e-commerce, and payments panning out?

MH: Increasingly the payment itself, kind of takes a back seat, because you are paying with the wallet. You see it with Apple. First, you integrated your credit card into Apple Pay, then it was your debit card, and now they’ve introduced buy now, pay later.

At some point, with PSD2, we’ll go to account-to-account payments. So, they become the overall integrators, and payments feed into this. And I can see the same happening on the merchant side.

Let’s say the customer enables the payment, or maybe even authorises the card to do the payment for them. The merchant will then receive payment, and afterwards say how they want to have it split between bank accounts. So, it’s more of a wallet-to-wallet interaction. And this will happen across multiple touchpoints, whether that’s your point of sale, or soft-POS, or an e-commerce store.

It could also be, let’s say, an EV charger that you interact with or some other service. So, payments become more identity-driven than numbers-driven.

ISV’s have a big part to play in this. They were the first to understand the power of payments data to deliver services towards SMEs. They also saved the day during COVID.

They can now monetise the overall payments journey. This could be interacting with an integrated payments provider, like Stripe, or another PayFac, and at some point, they could become an acquirer. It’s all possible now. This all allows them to gain more control, more responsibility, and grow into this environment.

TPM: Why are these technology partnerships essential for the industry? MH: Nobody can be everything to everyone, otherwise you end up being mediocre. Especially in a world that’s mostly digital. It’s so easy to change providers nowadays that you need to be very, very good at what you are doing. And this is where partnerships come into play.

Partnerships, to a certain degree, are everything. You concentrate on what you are best in, open yourself up to partnerships that enrich you, and create synergies. This is where innovation thrives.

For example, Aevi’s technology enables ISVs and PSPs to be more agile for their SME customers. A lot of providers also believe in partnerships in the same way we do, which makes it easier to connect. These partners allow us to grow with them, and tailor processes together, to then make them available for others, in a more general way.

Not all parties have the same strategic interests, but benefit from what you’re offering to them. And that’s how we are evolving in this environment.

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