Ecosystem Organizing the Mobile Point of Sale Ecosystem Analysis A Monthly Update on the State of the Mobile Point of Sale Ecosystem A PYMNTS.com Report Sponsored by ROAM Report Context This report is designed to organize the mobile point of sale ecosystem, one that has emerged over the last several years as smartphones and tablets deliver new point of sale acceptance capabilities for all categories of merchants. This report provides an initial overview of those players who have entered this space, including a description of their capabilities, solution features and functions and customer and go to market priorities. This report organizes the ecosystem into two broad categories: those merchant-facing This report provides an initial overview organizations who supply devices to merchants directly of those players who are part of the and those who “power” those players and supply them mobile point of sales ecosystem, their with the MPOS hardware, software, tools and services that capabilities and go to market specifics. helps merchant-facing organizations meet their customer needs. We have organized the ecosystem into We begin by evaluating 16 players and 6 “powered by” two broad categories: those merchant- suppliers. Merchant-facing organizations include: Ezetap, facing organizations who supply devices Groupon, GoPago, Intuit, iZettle, mPowa, NCR Silver, to merchants and those who “power” PayAnywhere, PayPal Here, Sage, Shopkeep, Square, those players. Vantiv, VeriFone SAIL and ViSalus. “Powered by” suppliers include Anywhere Commerce, FiServ SpotPay, ID TECH, MagTek, Roam, and SAIL (that ends up in both categories given its go to market strategy. It is worth noting that this ecosystem is moving quickly and this report is by no means complete. Information about these players is available in varying degrees of completeness. Details about volumes and shipments – the information that everyone finds most valuable – is not publicly available. We plan to update this report on a monthly basis to include new entrants, and updates on the players profiled in the prior month’s report. We are also in the process of compiling and will report out aggregated information about shipments and volumes. We encourage you to contact us at [email protected] if you would like to be included in this report and/or would like us to update your information as we have presented it. Ecosystem Organizing the Mobile Point of Sale Ecosystem Analysis Key Findings: • Many MPOS players enter the space with what we define as a “core” offering: a mag stripe reader/swiper device that attaches to a smartphone that includes card processing capabilities and merchant boarding. These solutions are often targeted to a specific merchant niche – new to the world “micro” merchants and/or service personnel who use these devices to expedite payment via card acceptance. Some core solutions, like those used in political fundraising, must include specific functionality so that they adhere to industry regulations. All of these players ride the existing payments rails in that they accept cards that consumers have today and use at physical points of sale presently. • Core solutions evolve quickly to include specific front and back office capabilities which provide more functionality to merchants and keep them sticky. Common capabilities include integration with accounting and invoicing functions. Core capabilities that deliver front office capabilities such as loyalty and CRM/marketing and inventory management capabilities are of interest to retail establishments and generally delivered via tablet devices that function as cash registers for those merchants. • MPOS solutions are being adopted by large retailers to create in store efficiencies and to move commerce closer to the customer. These retailers are using mobile devices – typically tablets – to help consumers in their store locate inventory, provide product information, and enable check out in the aisle. Some of these large retailers have made a decision to replace all existing in store registers with tablet devices in order to improve customer service and increase sales. • MPOS solutions in market, by and large, reflect the underlying capabilities of those who “power” them. Many suppliers have focused on meeting the initial market demand for “core” functionality, namely card acceptance and processing. Some now are expanding the distribution and functionality of those capabilities by offering SDKs for developers to use to MPOS-enable their offers. The distinction to be drawn here is the robustness of the underlying platform and degree to which these tools, services and apps can support a variety of hardware/peripherals, technologies such as EMV CHIP + PIN and NFC and business processes such as real time inventory management which requires integration with existing payment and specialized business software. MPOS Context: The diffusion of smartphones worldwide has revolutionized the payments industry in a variety of ways. Mobile phones are being considered (and trialed) in both the retail payments environment and the acceptance/point of sale environments. “Going mobile” today now means that both customers and merchants are able to gain tremendous efficiencies at a point of sale that can accommodate the form factors that consumers use today - the plastic card – and move that point of interaction closer to the Ecosystem Organizing the Mobile Point of Sale Ecosystem Analysis customer. Merchants large and small are able to gain business efficiencies as well as new customers and sales. Along the way, card readers have been transformed into tiny devices that plug into the headset jacks of mobile phones and tablets, turning these powerful IP-enabled computing devices into mobile point of sale terminals- thus the MPOS acronym. But the power goes well beyond card acceptance anywhere, by anyone. These mobile point of sale devices leverage existing payments functionality and infrastructure which means that the chicken and egg issues typically associated with new payments entrants don’t exist. MPOS card readers enable the acceptance of the plastic cards that consumers carry in their wallets today and like to use. MPOS may have started life as a way to enable casual sellers and small merchants to accept cards, but it is quickly moving up the merchant supply chain. MPOS actually started life way back in 2008 – before Square - in the mobile “field services” space enabling tradespeople and other field service personnel to deliver their services and generate both an invoice and a payment on site. Square applied this concept to the micro merchant who was unable to accept anything other than cash or check. Now, Tier one retailers are turning tablets into cash registers and moving payment and check out to wherever the consumer happens to be in the store.. Clearly, MPOS is reinventing the entire commerce experience for all types of merchants and consumers. Quite naturally, given the “perfect storm” of mobile devices, consumers and plastic cards and existing payments rails, the market has seen an explosion of POS players enter the market. MPOS players can be divided into two camps: the dozens of players who supply devices to But MPOS – mobile point of sale – isn’t merchants and the universe of players who “power” those just the domain of the small and/or players and provide them with the MPOS hardware, medium merchants. Tier one retailers software and enabling platform functionality needed to are turning tablets into cash registers meet the needs of their customers. The capabilities of and moving payment and check out to those who “power” the suppliers range greatly, and as a wherever the consumer happens to be in result, the MPOS offerings in market today exhibit a wide the store. range of functions from basic payment card acceptance and processing (eg. Groupon Payments) to enabling a merchant/consumer network (e.g. Square). The MPOS TrackerTM is PYMNTS.com’s attempt to organize the ecosystem in a way that makes it a little easier to see who has entered the MPOS space and where they play. In organizing this first “baseline” report, we have observed that many players enter the MPOS space with a basic “core” offering: a card reader with merchant processing capabilities, often targeted to a specific business niche. As market traction develops, other capabilities are added to enhance the offer and keep the business sticky. “Powered by” suppliers with a wide range of end to end capabilities - hardware, software, tools and services - can help merchant-facing organizations keep pace with the front and back office needs of their Ecosystem Organizing the Mobile Point of Sale Ecosystem Analysis customers is helpful and why the move to a platform as service/API play is where many players are moving. This monthly MPOS TrackerTM is our best attempt to give the payments space a “playbook” on the MPOS ecosystem – a sort of “who’s on first” perspective of who’s in, what their offerings are, and how the market may have TM evolved month to month. We’ll comment on who’s moved This monthly MPOS Tracker is or entered the space each time we update this report. On a intended to give the payments space a quarterly basis, we will do a “deep dive” into the vendors “playbook” on MPOS – a sort of “who’s that play in a specific category, starting with Core. We on first” perspective of who’s in, what define players in the core as those who offer the basic their offerings are, and how the market hardware/dongle solutions that enable mag stripe card may have shifted month to month. acceptance and merchant processing services. We will We’ll comment on who’s moved or assess their strengths and weaknesses and identify the entered the space each time we update leaders and laggards. If you are interested in participating, this report. please contact us at: [email protected] This reports is a first step but is by no means complete.