Upgrades at point-of-sale:
Financial aid for merchants

mobile-phone-2223997_1280IF YOU were going to pick an exciting time to work in the payments business, today would make for a good choice. At times it feels as if each day brings a software or hardware innovation, each bringing in turn faster speeds, surer security, easier access, and greater convenience.

For merchants in particular, payment technology advances can mean more business, more customers, and, therefore, more growth and revenues. What’s not to like?

Actually, there’s plenty not to like, at least in the form of the cash outlay. Keeping up with innovation means acquiring and installing new equipment, software, or both at the point of sale, and being prepared to update or replace it yet again the moment obsolescence sets in. And these days obsolescence doesn’t take as long as it used to.

Perhaps that’s why Visa is offering selected businesses $10,000 apiece for updating their digital technology.

I feel for merchants. The original method of collecting payments—calculating and recording sales by hand—required no capital outlay beyond paper, pen, and cigar box. It was time-consuming and error-laden, but it was affordable. The mechanical cash register was a vast improvement. One of those newfangled devices circa 1878 would have set you back $75, about $1800 in today’s dollars, but the machines proved their worth in speeding transactions, improving accuracy, keeping funds secure, and record-keeping. They became all but standard by 1915.

But it wasn’t long before improved mechanical registers rendered older models obsolete, and electronic models rendered those obsolete. Then embossed credit cards gained widespread use, forcing merchants to invest in manual credit card imprinters. IBM introduced cards with magnetic stripes to the market in 1969. (At the suggestion of his wife, Dorothea, IBM engineer Forrest Parry affixed the first mag stripe by use of a clothes iron.) That, in time, necessitated that merchants invest in mag stripe readers. Soon after that came readers that could communicate with a host, followed by chips and chip readers, and, today, contactless payment options via smartphone. And, not to be overlooked, merchants with more than one checkstand must multiply upgrade costs accordingly.

In an environment where new equipment is all but obsolescent even as it’s being installed, it’s understandable that merchants might be reluctant to upgrade too quickly or too often.

But help is on the way.

Last month USA Today reported:

Visa is looking to push more small businesses into updating their digital payment technology, offering up to $10,000 each to 50 U.S.-based small business owners that are committed to going cashless …

… because …

… Going completely cashless often requires upgrades to current point-of-sale systems, which remains an impediment for many small businesses, which is largely where cash remains king.

Fifty out of nearly 30 million U.S. small businesses—about 0.0001666 percent—hardly overwhelms. But Visa plans to expand the program. Perhaps they’re experimenting with incentives and cost-benefit ratios. After all, the article continues,

Visa isn’t doing this for charity. The world’s largest processor of credit and debit cards takes a small fee from every payment that runs on its network. The more payments done through them, the more revenue Visa gets.

We can only hope that this is a toe in the water. Depending on the temperature of the water, perhaps next they’ll proceed to a foot, a leg, and, finally, the whole body. If more players in the payments industry follow suit, we’ll see POS technology leap forward at record speed. 

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