80% of retail payments are card present*
In recent years, multiple "nextgen processing platforms" have been founded to replace the aging payments infrastructure used today. These innovators are looking to support the future of payments - international, verticalized, omni, data-rich, embedded. But they are facing the hard reality that 80% of payments are still card present...and card present is hard.
International processor entrants are fighting to avoid the liability of a bad card present strategy
80% of all payments are card present. So if you are a new processing platform, you simply must support card present or you are not a viable provider.
But card present is extremely varied. Card present encompasses any payment transaction where the cardholder is present with their card (or phone) to make the transaction. It could be in a stadium, in a store, at a self-checkout kiosk, at an EV charging station, in your home after a repair. Anywhere. For a processor to be able to support payments in all of those use cases, they need to support many different payment terminal types and APIs to embed them.
Having product breadth in one geographic market is already a lot to manage. Processors must do Level 3 certifications from each payment terminal application through each processing route to each of the card brands for MSR, EMV, and NFC. That often represents 600 or more test cases to manage and many months of work. To lower that hurdle, some terminal manufacturers are willing to provide a "free" direct certification of their currently "best-selling" terminal to a processors platform. Nothing is better than free, right?
Most terminal manufacturer-led certifications are "direct" - they certify their terminal directly to your processing platform. However, many of them have different terminal applications in each geographic market. That means that they require a direct certification for each terminal in each market. So just to offer the exact same terminal in 2 markets, the processor is spending time on 2 implementations and 1200 test cases. And that is just one terminal. What about that kiosk? What about a smartpos terminal? What about the new terminal line that starts selling like hotcakes? That small up front savings results in huge extra work for the processor to achieve any breadth of solutions.
Even worse, the processor who takes the direct certification approach has just built up an enormous tech debt. Every individual certification needs to be maintained for many years to come. The cost of just "keeping up" has grown exponentially.
The final nail in the coffin -- the innovative nextgen processing platform has just lost the ability to innovate. Every new feature they launch has to be implemented over and over and over in every solution in every market. Soon, the business case required to justify the effort is just too big. And innovation grinds to a halt.
The good thing is that the leaders of these innovative processor entrants are whipsmart and come from the very processors they are trying to replace. They know that they need to avoid the same pitfalls that are the albatross of legacy processors.
But when it comes time to shop for a "new way" to card present, they bump into a handful of international card present solutions that are just a thin layer on top of third-party providers. In our experience, processors walk away from those providers before they ever get live.
Some card present providers build a new "layer" - an app, a wrap, an API. They glue a bunch of third-party card present stuff behind it. Looks good today. But when it comes time for them to innovate, they have no control. They can only build on their layer and need to secure resources from third-party gateways, app developers, etc. to make anything work. And they must pass along all the extra on-going costs from all of those third-parties, costs which processors pass along to merchants. Unfortunately, no one in this scenario has enough of the tech stack to restructure costs to align merchant pricing with what actually sells. Months of certification efforts and zero revenues.
The ROI of avoiding both a) the albatross tech debt of a direct-certification dumpster fire; and b) the slow-moving, expensive, kludgy thin-layer providers that hinder merchant adoption, is absolutely enormous. Remember 80% of the market is at stake.
Does that mean they need to build the entire card present stack from scratch? Or buy BBPOS away from Stripe?
But they need a robust shopping list to achieve both the product breadth and cost structure they need over the long-haul.
The international processor's card present shopping list
Getting to a positive ROI on card present investments is possible if you know what you are looking for.
- Architecture designed for international processors: one integration to manage, yielding many card present solutions that work in every market
- All the use cases in one platform - standalone and semi-integrated: fixed and mobile, attended and unattended, multiple terminal lines, regulations/localization for every market
- Robust card present data and tokens in real-time, available to pull into their systems: for reporting, reconciliation, business intelligence, loyalty, and omni-commerce
- Scalability with a platform that streamlines deployment everywhere: cloud-hosted, with remote management tools, and simple terminal activations.
- Tight integrations to you and to your customers: APIs for everything from terminal integrations from any platform, to automated terminal setups, to full data reporting
- Future-proof: instantly add new terminals in the same kernel, unify APIs for ISVs, correctly add new features so they are actually useable, and do it across your entire fleet
- Pricing control: Ability to structure a unified, predictable commercial framework
Handpoint offers all this and more. Contact us to learn more about the international processing landscape.
Even if your processing platform is not yet international, we're happy to help you consider how the right card present platform gives you a viable path to the 80% of the market you were afraid to reach for.
* Or more. See, e.g., https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-e-commerce or https://fred.stlouisfed.org/series/ECOMPCTSA or https://www.upu.int/UPU/media/wwwUpuIntUniversalPostalUnionAboutUpuBodiesConsultativeCommittee/2023EuropeanEcommerceReportEn.pdf