Point-of-sale technology gets more muscle

To reach a wider audience, the digital payments provider linked2pay is focusing on the offline world by integrating with the terminal maker Pax Technology.

The partnership illustrates the need for the physical point of sale to be as full-featured as an e-commerce site, with support for mobile wallets, rewards, loyalty programs and customer messaging. Especially in the wake of the global pandemic, consumers expect these features to be integrated into any channel they use for shopping.

"COVID-19 … sped up the timelines for our product roadmaps, so what we've done here is answer that bell," said Bill Lodes, chief revenue officer for Oxnard, California-based linked2pay. "We've done a lot of work before COVID and that is why we have come out strong in handling that technology and being forward-thinking enough to get it on the developers' timelines."

Integrating new software into the operation of a POS terminal enables a wide range of payment options as well as rewards, loyalty programs or customer messaging. In many instances, the process would include links to back-office operations that require transaction information.

While the race to get mobile and multi-channel digital capabilities into merchants' hands quickly via an integrated POS ramped up in the past year, it was a sharp contrast to when many merchants and developers alike were not quite sure what payments integration meant in relation to payment terminals.

In its earliest days, integrated payments called for a lengthy process with a partner because "people were not fluent in the integrated payments technology," Lodes said. "But now, as it has grown, a lot of these software people have become more fluent with the payments ecosystem, realizing they need more technology than just a simple integration."

The linked2pay/Pax offering allows independent software vendors and independent sales organizations to support APIs for credit cards, ACH, instant merchant settlement and real-time payments. The benefit for ISVs is delivering multi-channel and real-time payments enabled through linked2pay's platform and onboarding automation, as well as risk management and security tools, all from one partner as opposed to multiple providers, Lodes noted.

"In the past, it was just standalone terminals that were put out there on a counter," Lodes said. "We didn't have anything that was integrated through our platform."

Linked2pay found a partner in Pax Technology with which it could integrate its payments software and be part of future advancements in contactless payment acceptance, a specialty of the China-based company that manufactures handheld Android payment terminals in addition to countertop models and PIN pads. A global operation, Pax operates its North American sector out of Jacksonville, Florida.

"The benefit of partnering with Pax is that they are strong across many verticals," Lodes said. "They offer a gamut of different options and when you integrate with them through their operating system and EMV kernel, the coding is the same across its product line, you can use any piece of equipment without having to do a recertification each time."

Linked2pay has long focused on digital payments and underwriting through its distribution channels. For the past five years, it has been providing smaller banks with technology for faster payments and other digitally-focused use cases.

But like other technology companies, linked2pay saw an opportunity in an ability to integrate with other providers at the POS, bringing digital advancements into an arena that essentially places it at the heart of the development of any enhancement to the POS.

In that setting, Lodes said, the ISVs take on more responsibility in going out and making contact with merchant sectors they are familiar with and handling the technical aspects as well as pricing for the products.

"They know more about the users now, too," Lodes said. "They know whether they want to pay via credit card, ACH through a bank account, online or over a mobile phone. When we go out to interview prospective payments providers, they are asking for more forms of payment."

In an example of how things have advanced at the POS in a way to operate in an omnichannel setting, restaurants provide a significant playing field for integrated payments expansion with order-ahead, mobile ordering, curbside pickup, take out, gift cards, loyalty programs and promotions. All of it is being managed through software integrations at the POS.

"Once you sign up and have a certain restaurant app on your phone, there are mechanisms that, if you are near the restaurant, you can tap an advertisement for a discount on a dinner," Lodes said.

Many of the initial disruptors in integrated payments were technology companies that brought a technology bend to the payments world, with Apple, Square and Stripe, among those, Lodes added.

"It made those of us in the payments world think about end users and what their behavior is — and create solutions accordingly," Lodes said. "Linked2pay has followed that trend in that a mom-and-pop business can go onto the linked2pay website and fill out an application online, especially for a card-not-present solution, and be up and running in hours, the same day."

Pax Technology views its work with any technology partners as critical to what the POS will look like in the future as mobile and digital payments and business tasks interact even more closely with a merchant's network.

"It is our mission to provide solutions that meet the demands of both businesses and consumers for today, tomorrow and for the future," Heather Mlachnik, senior vice president of acquiring and ISO sales at Pax, said in a release about the linked2pay partnership.

Data driven

Whether it is a newcomer to integrated payments at the POS, or one that has been operating in that ecosystem for years, the goal is generally the same — they want consumer data, particularly their payment preferences and credentials.

"The key at the POS is that if you integrate payments into the experience, you get payment credentials," said Richard Crone, chief executive of Crone Consulting in San Carlos, California. "Habitual use of order ahead and other services stemming from integrated payments will fuel an overall switch to digital payments."

Any restaurant using Square or Toast or Zettle can retain payment credentials when someone calls to place an order, thus turning it into a key component of integrated payments, Crone added.

"The endgame is knowing the customer," he said. "Many companies, like Square, have always had a vision toward this, as Square benefits from an enrolled base with a payment credential to spawn Square Cash."

The ability to build a database of customer payment credentials generally powers a company to bigger and better things as well.

Marqeta, a company that started with prepaid card products more than a decade ago, has transformed into one that powers many embedded payments transactions for the likes of Uber, Doordash and Square. It was no surprise that it grew strong enough to recently launch its IPO.

The pinnacle of such an approach, Crone said, is with Amazon and its current efforts to advance Amazon Go through an ability to retain payments credentials and convert that to a one-click checkout or an autonomous checkout in a physical location.

"But it's not really about checkout," Crone added. "It's about check-in, enrolling the customer with a payment credential that is pre-authenticated, user-ready through KYC, so that when they walk out, the payment is simply embedded into the experience."

Linked2pay may be moving into a physical POS integration now, but the company will remain in a good position to adjust to any future with autonomous checkout because it has established footing in integrated payments, Crone noted.

How an ISO views it

Merchants know integrated payments products exist, but some remain reluctant to embrace the advancements, fearing the effects of a long-term contract or overall costs.

"Education is needed to lessen the resistance," said Leigh Cook, president and technology specialist at Today Payments in San Diego. "If merchants were not forced to abandon what they are doing from scratch, I believe they would embrace digital advancements."

In that regard, Cook has turned to linked2pay to add her company's payment technology to its engine.

"We want to allow merchants a wide path to embrace the advancements in payment technologies available," Cook said. "We provide a simple add-on service that gently converts a merchant's accounting software and customer relationship management into a payment terminal that suddenly has access to all forms of payments."

There is no need to spend days to convert to integrated payments technology, Cook added. It can be done in hours — or even minutes — because there is no need to swap out the merchant's accounting software, Cook said.

Most merchants like the idea of having information obtained at the POS available to use or review in their accounting systems.

"I continue to see the introduction of POS terminals that offer a complete package from customer details on purchases to inventory and loyalty and more," Cook said. "We specialize in allowing merchants the ability to use their favorite accounting/CRM platform in the process as payments are taken and received."

In that process, Today Payments provides an add-on service that converts a merchant's accounting software and customer management into a payment terminal and its access to all forms of payments.

"We eliminate resistance to embrace the new digital advancements," Cook added.