Omni-Channel, Semi-Integrated, and Unattended Take Center Stage

Some important payments developments are asserting themselves this year. Don’t risk being left behind.

The pace of change in the payments industry is normally fast. But the perfect storm of the U.S. EMV migration plus the mobile-wallet revolution has accelerated that pace to blistering.

It’s an exciting time, but also one fraught with risk as merchants and service providers strive to prioritize their time and investments in the face of significant change. Put simply, there are a lot of moving parts.

Ingenico Group has been on the front lines with merchants, independent sales organizations, acquirers/processors, independent software vendors, and other service providers, leading them through upgrades to their payment offerings. So we know the questions they are asking and the emerging challenges they are looking to address. With that in mind, we compiled this list of top trends we’re watching in the U.S. These are the ones payments pros can’t afford to ignore:

Omnichannel payments get real: We are seeing more and more merchants that want to differentiate themselves by allowing customers to pay in multiple ways via multiple channels, and by enabling customers to start a sale in one channel (such as via mobile device) and finish it in another (such as in-store at a payment terminal or via an unattended kiosk).

The objective is to stay connected to consumers throughout the entire buying journey, whether in-store, online, or on mobile devices. Major retailers such as Wal-Mart Stores Inc. and The Home Depot Inc. have already begun deploying multichannel solutions to provide their customers with a seamless payment experience no matter what channel they come through. This helps build trust and familiarity with the brand.

Multilayered security solutions become the norm: Major card data breaches in late 2014 and 2015 caused merchants to re-think their security approaches. We recommend a multilayered approach that, in addition to EMV, incorporates point-to-point-encryption (P2PE) and tokenization. Further, the PCI Security Standards Council and analyst firms such as Gartner recommend PCI-certified solutions for merchants that are implementing P2PE.

Continued EMV adoption: The migration has begun, but merchants and consumers still have a long way to go. In February, a survey from The Strawhecker Group (TSG) found that just 37% of merchants were EMV-ready. Further, TSG estimates that consumers will be able to use their EMV credit and debit cards at only 50% of U.S. merchant locations by June.

Based on our experience with driving EMV migration in multiple countries around the world, we expect that slow roll to continue. We also expect that more card issuers will begin to transition to chip-and-PIN EMV cards in 2016, a process that will last two to three years.

The proliferation of semi-integrated solutions continues: We are seeing more merchants go with this model for their EMV transitions. One of the reasons EMV transitions are so complex is the PCI data-security standard. Any change to a payments infrastructure can affect compliance. Semi-integrated solutions prevent card data from entering the point of sale. Instead, the data is encrypted and routed directly from a secure smart terminal to the merchant’s card processor or gateway. This enables merchants to quickly and easily integrate with payment devices and isolate payment processing, helping to reduce their PCI scope.

More mobile-payment options emerge: Today, the predominant mobile-payment solutions are Apple Pay, Android Pay, and Samsung Pay. But it seems there’s a new market entrant every month, including merchant-specific solutions such as Walmart Pay. Newer features include loyalty-program integration.

Ingenico Group expects the mobile-payments sector will become even more crowded in 2016. Merchants should evaluate their wallet choices and accept all those they determine best meet their customers’ needs and desires.

Pay-at-the-table becomes common in the U.S.: Pay-at-the-table technology is already standard in other developed countries. That’s mostly due to EMV. In an EMV world, it’s a best practice that cards never leave the customer’s possession during a transaction. In the U.S., an additional driver is mobile-payment solutions such as Apple Pay, which require either a fingerprint ID or PIN.

The payment method can’t come to the point of sale. Customers aren’t going to turn over their PIN or smart phone, so the POS has to come to the customer. We are already seeing strong demand for pay-at-the-table solutions in the U.S., and believe this market will see substantial growth across all hospitality categories.

EMV and NFC start to appear in unattended environments: Unattended payment-acceptance solutions, such as those used in parking lots and kiosks, are frequently cash-only. Those that do accept card payments are rarely EMV- or NFC-enabled. We are already doing a lot of work in the unattended space, and expect that in 2016, tens of thousands of unattended payment solutions across market segments, including retail, health care, and transportation, will be upgraded to accept these new forms of payment.

mPOS adoption soars: Mobile point of sale (mPOS) has largely been a strategy for micro merchants and small businesses. In 2016, we believe mPOS will make big headway among larger merchants. MPOS is no longer just about the “cool factor.” Merchants are reporting real returns on their mPOS investments, thanks to benefits such as faster checkout, shorter lines, increased upsell and cross-sell opportunities, and the ability to create pop-up stores in high-traffic locations.

For more detail and insights into these trends, check out our webinar with 451 Research’s Jordan McKee (archived at www.ingenico.us). If your organization isn’t already actively engaged on all of these fronts, take the lead to make sure you don’t get left behind.

—Rod Hometh is senior vice president for North America at Ingenico Group.