FX International Payments
By Elena Malykhina
On-premise POS systems require software to be installed and data stored on local servers that run on a closed internal network. Cloud-based POS systems, though, are generally offered as subscription-based software as a service (SaaS) and accessed over the internet on any browser. Therefore, POS systems in the cloud are independent from platform and operating system limitations, and may be compatible with a variety of POS hardware.1 That kind of universal access and interoperability may be particularly beneficial to companies doing business internationally and requiring global payments.
Although security was initially a concern when cloud-bases services first arose, today it’s generally agreed that storing data in the cloud versus local servers provides an extra level of security, as well as redundancy.2 In addition, sales data can be accessed 24 hours a day, seven days a week. This can be a valuable benefit for businesses that handle global payments and have customers in different time zones.
Businesses with international customers can have a cloud-based POS system that will process domestic and global payments in a single integration. In a retail scenario, for example, from the time a shopper swipes, inserts or taps a credit card, the payment may never leave a cloud-based POS system, eliminating the need for multiple third parties.3 Shoppers may even have the added convenience of paying in their own currency if currency exchange has been integrated into the POS system. With a cloud-based system, integrating add-ons may be much simpler than with a traditional POS system.
Some businesses may have concerns over what happens when such a POS system goes offline and data cannot be accessed. As the technology has matured, many of today’s cloud POS offerings allow companies to keep accepting transactions and later sync their data when an internet connection is reestablished.
Cloud-based POS systems also may be more cost effective, since there typically are no upfront capital expenditures, maintenance fees or hardware/software licenses. Software updates are automatically pushed, whereas legacy POS systems usually require an IT team to keep up with updates and new security features.4 For businesses that deal with global payments – especially SMEs with small staffs and tight budgets – these can be important benefits of moving to the cloud.
Over the next couple of years, the majority of merchant payments processing revenue growth in the U.S. – more than $1.5 billion of new revenue – will be acquired through software solutions instead of traditional payment terminals, according to a report from McKinsey.5 Cloud computing is making the integration of payments functionality into other software solutions less troublesome and also enabling global payments on lower-cost hardware such as tablets, the report found.
McKinsey also notes that mobility is among the top reasons why businesses are choosing cloud-based POS. Mobile point of sale (mPOS) can be a smartphone, tablet or another wireless device that functions like a cash register or a sale terminal. The system can be installed and operate on an iPad or an iPhone. At restaurants, wait staff can take payments right at the table side. At department stores, retail associates can swipe a credit card anywhere in the store and email the receipt to the customer, therefore, making the checkout process more convenient for shoppers.
Approximately 7 percent of small merchants in the U.S. use smartphones as their POS systems, McKinsey found. In a survey, 33 percent said they would consider using mobile POS systems in the future.6 Likewise, 6 percent use tablets for payments, and 44 percent might in the near future. A report from Capgemini found that the mPOS market is expected to reach 245.2 million units by 2022, fueled by the propagation of smartphones and cloud-based technology.7
Further, cloud-based POS may enable the move to Chip Card Technology (CCT) to be achieved more easily. The goal of CCT is to create a global payments standard to address credit card fraud.8 CCT has been adopted in many European countries and U.S. adoption is underway now. Many POS equipment manufacturers are building both contact and contactless – as well as mobile – capabilities into their CCT-enabled devices, into which cards are inserted instead of swiped.9 There are already several cloud-based POS solutions on the market compatible with CCT devices.
Cloud-based POS allows businesses to manage global payments through a single system. With the added flexibility of POS software running on mobile devices, sales transactions can be processed anywhere, anytime, using any preferred method of payment. Cloud-based POS may also result in reduced costs and increased efficiency, especially for SMEs.
Elena Malykhina is professional writer who has covered science, technology and business for more than 10 years. Her work has appeared in InformationWeek, Scientific American, Newsday, The Wall Street Journal and Adweek, as well as through the Associated Press.
1. "The Difference Between Cloud and Traditional POS Systems", Toast; https://pos.toasttab.com/blog/cloud-based-traditional-pos-systems
2. "8 Things to Consider Before Implementing a Cloud Based POS System", Business Bee; http://www.businessbee.com/resources/profitability/8-things-to-consider-before-implementing-a-cloud-based-pos-system
3. "Point of Sale Payments", Adyen; https://www.adyen.com/our-solution/point-of-sale-payments
4. "6 Reasons to Get a Cloud Based Point of Sale System", Lightspeed; https://www.lightspeedhq.com/blog/2015/06/6-reasons-to-get-a-cloud-based-point-of-sale-system
5. Innovation and Disruption in U.S. Merchant Payments, McKinsey & Company; http://www.mckinsey.com/industries/financial-services/our-insights/innovation-and-disruption-in-us-merchant-payments
6. How the Payments Industry Is Being Disrupted, McKinsey & Company; http://www.mckinsey.com/industries/financial-services/our-insights/how-the-payments-industry-is-being-disrupted
7. World Payments Report 2016, Capgemini; https://www.worldpaymentsreport.com/download
8. "8 FAQs About EMV Credit Cards", CreditCards.com; http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php
9. EMV in the U.S.: Putting It into Perspective for Merchants and Financial Institutions, First Data; https://www.firstdata.com/downloads/thought-leadership/EMV_US.pdf