Mobile technology is rewriting the rules for point-of-sale system services. This is creating opportunities for solution providers with security, wireless and broad e-commerce skills.
Tablet computers have accelerated adoption of open system point-of-sale (POS) solutions that integrate multiple transaction methods, including mobile and traditional fixed in-store sales terminals as well as e-commerce sites. This shift means systems are less tied to specific proprietary POS system hardware than in the past.
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"There is a paradigm shift happening in POS," said Jim Stewart, general manager for Advanced Data Systems, a POS system service provider in Midlothian, Ill. "The iPad has made a certain dent in our space."
One motivation is generational: Entrepreneurs are opting for systems that can "follow" clients and support better tableside service. Rather than adopting fixed POS system terminals, small-business owners that have grown up with PCs and the Web are opting for mobile computers that can run POS applications served up via an Internet connection, Stewart said.
To amplify his point, sales of handheld POS system devices reached $1.1 billion in 2011 and are projected to hit $3.1 billion by 2018, according to a forecast from Winter Green Research.
The shift toward mobile devices and other open system hardware has inspired Advanced Data Systems to shift toward a subscription-based model for the POS system services and software applications it represents, Stewart said.
In addition, the solution provider increasingly is being called upon to create solutions that combine customer loyalty systems with social networks. "The line is blurring quite a bit with loyalty and credit-card integration and online ordering applications," Stewart said.
Restaurant, hospitality and retail industries using mobile POS system services
If you have security or wireless skills, the adoption of mobile solutions could help solution providers get their foot in the door of this vertical market, said Hillel Sackstein, president of Virtual Graffiti Inc., a $30 million POS system services and solution provider in Irvine, Calif.
As retailers, restaurants and hospitality companies incorporate mobile devices into their POS workflow, more of them require security and wireless experts to bring discipline and better management to their network infrastructure, Sackstein said.
Case in point: Virtual Graffiti was tapped to help retailer Cathy Jean Shoes centralize its order and reporting process and then create a secure conduit for data to be shared among its 46 retail locations. It used a secure VPN tunnel and firewalls to comply with Payment Card Industry (PCI) standards.
Retailers are motivated both by an interest in rolling out internal mobile applications, such as personal shopping solutions, and by an interest in encouraging store visitors to use their mobile devices to consider in-store promotions and other marketing offers.
Forrester Research Inc. reported in January 2012 that almost half of all tablet computer users are actually completing some sort of shopping transaction on their devices. A similar number of consumers use smartphones to research or search for information on products while they are in a store.
"Retailers have realized that every person is carrying around at least one wireless device that might be able to connect to their network, so their needs for this infrastructure have significantly increased," Sackstein said.
About the expert
Heather Clancy is an award-winning business journalist in the New York City area with more than 20 years’ experience. Her articles have appeared in Entrepreneur, Fortune Small Business, the International Herald Tribune and The New York Times. Clancy was previously editor at Computer Reseller News, a B2B trade publication covering news and trends about the high-tech channel.
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This was first published in June 2012