Andrea Zucchiatti, General Manager of PAX Italia shares his view on the future of the Android SmartPOS in an interview with leading Italian payment industry publication AziendaBanca:
Andrea Zucchiatti, General Manager of PAX Italia
The change in technology and habits brought about by the pandemic are creating ideal conditions for Android payment terminals to become the accepted standard for POS devices. This is PAX's core strategic response to the dynamics of a post-Covid world, one where new spending habits by cardholders and new business needs are emerging at merchants of all sizes. "PAX was the first vendor to introduce Android terminals in Italy", says Andrea Zucchiatti, co-founder and General Manager of PAX Italia, "and we continue to lead the way in monitoring the evolution of traditional terminals as they increasingly adopt more smartphone-like features that people commonly associate with Android."
Payment acceptance in a post-pandemic world
A very strong trend of change is that merchants, from small retailers to bars & restaurants, have a growing need to accept mobile digital payments. "Traditional terminals, especially countertop devices, have always faced challenges in being integrated with the average merchant's checkout setup, requiring significant levels of onsite maintenance and presenting complications around cabling," continues Zucchiatti, "and now the abandonment of 3G networks makes it necessary to update legacy POS terminal technology, all of which means increased costs for key stakeholders. Thanks to PAX, the price point of Android terminals is gradually approaching that of traditional terminals, especially legacy desktop devices which are increasingly less popular due to the need to adopt more costly communication technologies such as 4G and WiFi. These conditions therefore make the replacement of traditional portable devices to newer generation Android SmartPOS solutions sustainable".
Why is a POS terminal "Smart"?
The changing dynamics were further confirmed by data provided by Zucchiatti: in 2015 countertop terminals accounted for over 40% of POS devices sold, whereas today the number has dropped to around 20%. "We are also going through a period of strong technological change," says Zucchiatti, "where we are seeing the abandonment of PSTN dial-up connectivity, which means merchants are receiving more and more mobile terminals with SIM cards. A SmartPOS based on Android offers more advantages when compared to legacy portable terminals as well as mPOS dongles. It beats them hands-down in terms of design and functionality: it provides an appstore type marketplace for merchants, allows remote help-desk technical assistance and, depending on the Payment Service Provider's strategy, enables an acquirer-to-merchant distribution model where the SmartPOS can be shipped directly to the merchant and configured remotely. mPOS dongles are fast being replaced by Android MiniPOS, a printerless SmartPOS that looks and feels like a smartphone. And when SmartPOS are deployed via connection to PAXSTORE, a whole new world of operating procedures is evolving. No more Bluetooth pairing problems when connecting to merchants' smartphones, which are very often all configured in different customized ways. Using PAXSTORE, Payment Service Providers are able to better manage and monitor their terminal estates, and enrich their service offering by publishing new apps via their marketplace".
Added value, still under-valued
While the true concept of value-added services comes to life through Android SmartPOS terminals, the majority of merchants have yet to be educated on their true value. "We have to differentiate between 'terminal management services' and 'merchant services'," explains Zucchiatti. "For those organizations deploying Android SmartPOS to merchants, these new generation terminals are always connected and can be remotely diagnosed in real-time, thus driving a strategic re-think of the full-service offering model. In observing the provision of new additional services offered directly to merchants, we noticed some interesting 'sector verticalizations': digital contracts, queue management, home delivery, ticketing, ordering at table and cash register software. While the more traditional minded merchant does not yet understand the usefulness these additional services can deliver, the look & feel of Android terminals is considered more aesthetically pleasing. PAX is totally focused on promoting the deployment of Android SmartPOS devices as the standard for all merchants, so that POS network providers can prepare for the provision of new services in future. This strategy continues to be a successful worldwide one, because no merchant ever wants go back to using a traditional terminal after they have experienced using an Android SmartPOS device."
The convergence of payments & services
PAX Android SmartPOS and the PAXSTORE platform today form an ecosystem of over 3 million connected terminals across more than 150 marketplaces, through which over 5,000 software app are available. The ongoing replacement of legacy terminals with Android SmartPOS models is accelerating the convergence of payments and services, something which the industry has been talking about for years. "PAX is a basically a provider of payment terminals to the banking world", says Zucchiatti, "and our company's DNA is made up of security expertise and the development of specialist applications which are often focused on facilitating the coexistence of payment applications and the many value-added apps available on the market and now also published on PAXSTORE. The spread of Android SmartPOS is increasing network processing capacity. In shops, there are now many smart peripheral devices, so it is up to the Payment Service Providers to leverage them strategically by offering innovative services to merchants. Properly setting up the network today means investing in the future and finding the time to evaluate which apps are best suited to specific customer market segments. Of the more than 5,000 apps available, we see have also noticed that many are still linked to specific sector needs. For example, although there are hundreds of checkout apps, none of those developed for international markets can be used in Italy because of very specific Italian taxation regulations. Then there are apps that enable bricks & mortar merchants to receive and manage online ecommerce orders. We are also seeing the convergence of employee meal vouchers and banking services thanks to SmartPOS technology; very common in Italy, this is something the industry has been talking about for years, but has been extremely difficult to achieve with traditional terminals".
It's all about merchant proposition
After years spent refining their service models, the main challenge faced by Payment Service Providers who are now deploying Android SmartPOS terminals is that they often do not fully comprehend the advantages offered by these devices. Staff must be re-trained all the way down the merchant services value chain, and commercial proposals to merchants re-evaluated and updated.
Zucchiatti says, "Some Payment Service Providers already have new and clear proposition in place, but for some of our clients it is not always easy to reposition the Android SmartPOS product as their new standard; the challenge is that merchant propositions based on traditional payment terminals have been around for over 20 years, whereas even entry-level SmartPOS devices are considered top of the range when compared to even the most sophisticated of legacy traditional terminals.
Because PAX has the widest range of SmartPOS products in the world, this allows PAX Italia to select the most suitable products for the Italian market, with a view to creating new and enriched service models to help Payment Service Providers diversify their smart offering.
Because the world's entire electronics industry has been suffering from shortages of semiconductors and other components - which are also used by PAX when manufacturing certain terminal models - these ongoing supply chain disruptions are making Payment Service Providers focus on certain specific PAX models whose supply is not as badly affected, thus actually providing them with the benefits of simplified order management and a more efficient deployment of uniform payment terminals in the field. Nevertheless, they feel reassured by the fact that they can always demand and deploy any of the many other different PAX product models, whenever required."