The point of sale (POS) and payment solutions market has become more competitive as new vendors enter the fray and merchants have the option of deploying lower-cost, bare-bones solutions. For Independent Software Vendors (ISVs) and solutions providers that want to stand out in an increasingly crowded space, value-added services are quickly becoming a crucial market differentiator.
Value-added services provide retailers with a way to drive repeat business, increase customer stickiness, and gain a better understanding of their customers’ buying patterns. For merchants, value-added services allow them to transition from simply selling products to selling results or enhanced experiences. By wrapping each transaction with a variety of loyalty programs, rewards, security, omni-channel support, flexible payment options, and other features, merchants can improve customer loyalty and satisfaction.
For ISVs, these value-added services provide competitive differentiation in a market where merchants can easily choose to deploy off-the-rack POS solutions. By helping merchants navigate the complexity of multichannel sales, new payment types, social media opportunities, loyalty/rewards programs, and other services, ISVs improve their own standing as experts poised to take their customers to the next level of sales and service. Just as important, merchants can leverage these tools to become more competitive and, as a result, grow their business at a faster rate.
This idea of “servitization” is already playing out in other markets, where manufacturers are boosting their bottom lines by augmenting product sales with service plans based on output or uptime. By aligning their own interests with the merchant’s (and the merchant’s increasingly demanding customers), an ISV can market their ability to deliver on capabilities or outcomes (not just software) and put themselves in a position to continue to provide those outcomes over a longer term.
Value-Added Services: Enhancing POS
There are a wide variety of value-added services ISVs can take advantage of to help improve their integrated payment and POS offerings. Each can provide specific benefits to both merchants and their customers.
Stored value solutions allow merchants to manage customer rewards, gift cards, and other types of vouchers or offers. Advanced systems allow ISVs to offer merchants next-generation features like mobile gift payments, mobile gift card management, digital-initiated promotion cards, and social media promotion.
Account management services help merchants by automatically managing payment card data for recurring or card-on-file billing systems, which saves time and improves security.
Data and analytics services are a key differentiator, as these solutions provide access to metrics on payment transactions that provide new insights into purchasing behavior and the effect of marketing and customer outreach efforts. That data can help increase sales and tweak existing programs.
Payment optimization services involve a mix of technology and consulting to help merchants reduce costs, identify new markets, take advantage of interchange incentives, and better manage payment services as their needs evolve.
By providing support for multiple payment types, ISVs can help merchants more quickly adopt emerging technologies such as mobile wallets and mobile check acceptance, as well as online payments, gift cards, and other payment card alternatives. This flexibility makes it easier for consumers to do business with those merchants and increases sales.
With payment options expanding, card detection solutions that support Enhanced BINQuery enable merchants to automatically determine if a payment card falls into a specific BIN [bank identification number] range (PrepaidCard, DurbinBINRegulation, etc.), which reduces POS errors and improves efficiency.
Hosted payment services can help merchants establish online payment acceptance by making it easier to display, and effectively direct customers to, a seamless and secure payment experience.
As the number and scope of payment card breaches increase, security services are top of mind for merchants and ISVs alike. Supporting point-to-point encryption, tokenization (which removes the need to store cardholder data), secure management of recurring transactions, PCI validation, and other security features will position the ISV as a trusted partner for retail merchants. In turn, merchants using robust security services can provide peace of mind to security-conscious consumers.
The Future of Value-Added Services
Customers and retailers are showing increased interest in the types of data-driven services enabled by value-added services. An Accenture survey found that 54 percent of shoppers were open to sharing personal information and shopping preferences with retailers so they could receive personalized offers – that number stood at just 33 percent in 2014. Loyalty program enrollment has also swelled to 3.8 billion, according to Colloquy’s 2017 Loyalty Census.
Boston Retail Partners also found that 69 percent of surveyed retailers see opportunities in using social media to improve customer service, indicating an openness among merchants to new technology approaches.
Of course, the transition to a data-driven approach to retail that focuses on holistic consumer experiences rather than pushing boxes will not be easy for most traditional (and many online) merchants. ISVs that provide value-added services to their merchants can help make the transition less arduous and also help them thrive in the more-demanding retail environment of the future.
Value-added services help merchants reach their customers using the social media channels, shopping techniques, and payment methods their customers prefer. This not only drives customer loyalty between the consumer and merchant, but also strengthens the relationship between the merchant and the ISV – creating the basis for a valuable and long-standing partnership.