As in many other areas of life, the pandemic has accelerated changes in the payment processing activities of acquirers for their merchants. These changes go beyond the obvious, like the shift to online payments.
Underneath this move online lies a greater shift towards accessibility and convenience in shopping. At the same time, our spending habits as consumers are evolving towards a more diverse range of payment methods.
It's trends like these that have huge implications for a merchant’s expectations of their acquirer – especially when you consider that keeping up with these trends enables merchants to save on administrative time, labor costs, and hardware while achieving maximized conversion rates via happy paying customers.
Let’s walk through the steps to discover what those expectations are all about and identify which smart Point-of-Sale (POS) solutions are currently out there.
Acquirers meeting with the merchants’ new POS standards
So what’s the starting point? Simply put, it’s the old model of providing a terminal on a multi-year contract. Even though this model continues to prevail across Europe at present, it is becoming less relevant in today's market. Instead, we’re heading towards a multi-channel – or even omni-channel – world.
Built up by the pandemic, there is an overwhelming shift away from cash and towards electronic payments.
Today, we as consumers are looking to pay using a multitude of different options, from instant payments to contactless cards, digital wallets, and cryptocurrencies. Meanwhile, mobile wallet payments continue to rise in popularity, with WorldPay and others predicting that mobile wallet payments could account for almost half of the world’s non-cash payments by 2030. 
In fact, data from TietoEVRY, among other sources, suggests that eight in ten Europeans now favor contactless electronic solutions for any payment occasion. Payment methods are becoming increasingly diverse, with Buy-Now-Pay-Later (BNPL) growing at 36% per year, and 40% of the world’s businesses planning to accept crypto in the next 18 months. 
That, in turn, is leading to a second shift: a massive expansion in Europe’s smart terminal estate to new, smart Point-of-Sale (POS) systems. Further research reveals that Europe’s POS estate grew by 8% last year, with growth of 30% predicted by 2026. 
A third market shift leading to the current expansion of smart POS systems is raising merchant expectations. They expect terminals to be able to accept all these different payment forms seamlessly, with even the smallest merchants looking at how to monetize their online presence.
Next-level payment processing
Other trends, including the rise of integrating payments with ordering and logistics, or “embedded payments”, promise further change. Merchants want their terminals to sync with other business functions such as loyalty systems, billing, inventory and stock management, and logistics. Across the board, acquirers will distinguish themselves in tomorrow’s market through their capacity to deliver innovative payment processing solutions to their existing merchant base – and new types of merchants.
One great example of such an embedded payment set-up is the dining out segment. Here, acquirers have managed to grow revenues through the pandemic thanks to the enormous rise in online ordering for take-out food.
However, when it comes to the payment for take-out food, the acquirers' target merchant has shifted from individual restaurants to the app or platform delivering the payment service to that restaurant (think Uber Eats or Deliveroo). The reason for this is that we as consumers prefer to pay for our take-out meals directly via the app - which we were already browsing to select our favorite food - than by leaving that app and having to contact the restaurant separately for ordering and payment.
A similar trend is happening in clothing and apparel, with players such as Lyst and ShopStyle bringing together leading brands like Harrods and Saks Fifth Avenue in one place for shoppers to browse and purchase.
Acquiring the key to the right level
In the meantime, next to payment facilitating platforms, independent software vendors are building apps that link merchants with their target consumer segments. Most of these vendors are not payment experts but need to add payments as part of their offer. Serving these software vendors and the merchants associated with them is a huge opportunity for acquirers in the new acquiring landscape.
In fact, marketplaces, software vendors and payment facilitators are considered to be focus areas for acquirers in the years ahead – alongside expanding the palette of payment types offered, and innovation at every level of the acquirer’s business, be that merchant onboarding, reporting, contracts, terminals, or payments integration.
Small and micro merchants opening doors to smart POS solutions
Let’s look more closely at payment integration, in particular the increasing number of merchants accepting electronic payments. A 30% rise is estimated between now and 2026 across 28 European markets. The vast majority are micro-merchants such as street food vendors, personal trainers, and providers of other personal services.
This merchant majority has specific requirements concerning their POS solutions for electronic payments. To start with, the switch to electronic payments must be simple to execute, as small business owners don’t always have the time or expertise to undertake complex integrations.
Secondly, a card machine for small businesses needs to be reliable, portable, and secure to reflect the growing trend of micro-businesses moving to where their customers or markets are throughout the working day: think taxi services, for instance.
Thirdly, with the comparatively low turnover of most micro-businesses, transaction security is absolutely crucial, as losing revenue and customer trust through fraud can have a significant impact.
Lastly, payment solutions offered to micro-businesses must be both flexible and reasonable.
In practice, this means offering a series of solutions that can be used either in accordance with a merchant’s mobile device, or on a stand-alone basis – together with a range of functions to fit every merchant’s needs from basic payments acceptance to refunds, paper and printed receipts, and sales history management.
Above all, the issue of cost resonates loudly with micro-merchants looking to protect their margins and grow revenues. In that regard, it’s important that transparent and easy-to-understand pricing structures are offered to them, including low basic fees per transaction.
Bringing along smart hardware POS solutions
To highlight a few examples of POS terminal hardware developments, the smart POS terminal by provider company Handpoint comes to mind. It is low in weight, offers portability, capacity for updates over the air, as well as the ability to add new functions via an app store, very much like a mobile phone.
On top of that, Handpoint’s smart POS terminals are combined with the Handpoint international platform. With this platform being offered in the US, UK, Canada, Europe and South Africa, acquirers and merchants can combine secure payments with customer insights from every single dip, tap or swipe.
Another example of putting innovative POS terminal solutions to market is Adyen, the global payments platform of choice for many of the world's leading companies. In January, it announced the launch of mobile Android POS terminals in the EU, UK, and the United States.
The Adyen devices represent a fundamental change in the role of the payment terminal, functioning as an all-in-one solution, eliminating the need for separate cash registers, barcode scanners, and customer-facing displays.
Additionally, these terminals come with an app management system, allowing merchants to upload and manage the apps they use every day, for inventory management, loyalty programs, returns and more. The launch of these multi-purpose terminals should not only reduce the cost of hardware, but also help businesses drastically improve the in-person customer experience.
Terminal steps: Software for mobile
A POS solution example for merchants specifically targeting the use of software on mobile devices is “Tap on Mobile” from the Discover Global Network– a suite of software tools enabling mobile devices to accept contactless payments in minutes, rather than waiting days or weeks for a card reader to arrive.
Ultimately, we can note the focus on using mobile phones as POS with Apple’s launch of a new SoftPOS service in the US, with Stripe as acquirer, already counting more than two million business customers. It will enable small businesses to accept contactless payments like Apple Pay directly on their iPhones without the need for any extra hardware.
The panoramic view on the world of POS
We can conclude that the shift to contactless payment has set in motion the shift from old acquiring models of POS terminals to a smart POS world. With electronic payments continuing their relentless rise via more and more different forms of payment applied by the buyers, merchants want to be able to accept all those payment forms in a smarter and faster way.
Many solutions are being developed for this purpose for merchants, with special attention to the small and micro-merchants, to be as flexible as possible without missing any chance on conversion. From smart POS terminals serving as all-in-one hardware solutions with an integrated experience to merchants, to payment acceptance made possible via software directly on the merchant’s mobile phone.
For this smart POS world to become a success, acquirers on the other end need to focus on the marketplaces, software vendors and payment facilitators in the years ahead to be where the merchants need them. This will allow them to achieve their purchase conversion with the help of those POS solutions that work best for them and – just as importantly - give us paying consumers a smooth customer experience as well.
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 New merchant segments are going mobile. Here’s why. | Paymentscardsandmobile.com
 The old acquiring model is dead – here’s what’s next... | Paymentscardsandmobile.com
 From hardware to software: How smart POS devices are reinventing payments | Handpoint white paper, Nov 2021
 Adyen launches Android POS terminals | Prnewswire.com
 Tap on Mobile: the digital revolution moves from payment to acceptance | Paymentscardsandmobile.com
 Apple Enables Third-Party Payment Access to SoftPOS Solution | Businessinsider.com