Mobile POS and Going Plastic

Investment in mobile POS

It is expected that 17-20% of total retail sales will be using a mobile device by 2016.  Retailers across multiple industries and businesses both large and small were included in these estimates.  With or without data, it makes sense – nowadays even one-of-a-kind businesses such as food trucks increasingly accept credit and debit cards.

Technological developments over the past few years have made it much easier for businesses to do this, especially with increased use of tablets as cash registers.  Many apps are free or low-cost for businesses to install, meaning they can accept various forms of payment and increase the amount of customers they can serve.  Prior to this, customers and businesses lost from a cash-only establishment – customers who want to buy and businesses who want to sell both get nothing when someone forgets to carry enough cash. According to a poll by Business Solutions, 48% of businesses polled plan on investing in mobile POS hardware.  Why is this good for both retailers and consumers? Let’s explore the pros and cons.

LocusPlay Mobile POS

Pros/Cons in retail of going to mobile POS

As businesses are increasingly able to accept credit card payments, customers will begin to expect this service.  Cash can be as inconvenient for a customer to carry as it is for a business to pay credit card transaction fees.  That is why low-cost mobile point-of-sale systems are so vital for businesses of the future.  A business’s ability to accommodate customer needs will increase customer satisfaction and the business’s revenue.  Mobile point-of-sales systems in particular allow businesses to come to customers directly, especially with a product like lottery tickets. The ability to reach out to customers directly, quickly and easily means tapping into a wider consumer base, which means increased revenue.  As demand for more mobile point-of-sales systems increases, expect providers to appear that will drive the costs down.

That leads us to the two major fears for businesses looking to accept credit card payments and adopt mobile point-of-sale systems but have not – the first is fraud and the second is that transaction fees to credit card companies and banks may outweigh benefits of increased sales.  Fraud from credit card payments is rare but still unavoidable at the present moment and so the only concern is for smaller businesses that cannot afford to lose money.  Even only accepting debit, which would be financially safer for a business, comes with the cost of transaction fees.  However, there is already a push occurring in the United States for more regulation on the maximum amount of fees allowed.  Typically banks charge around 1-3% per transactions, which is enough to drive some price-sensitive businesses (lots of food retailers included) away from accepting credit card payments.

Comparing the United States to many smaller markets yields interesting observations.  Smaller markets may be more sensitive at the moment to transaction fees but the push towards credit and debit is still occurring.  For example, Brazil went from 124 million credit cards in circulation in 2008 to 207.4 million in 2011 despite paying the highest interest rates for credit card loans.  In Nigeria, there has been a growth of 38% in credit card circulation since 2003.  Many African countries are still cash-based, but as infrastructure improves, expect this to change.  Trends in Asia are also similar – Indonesia experienced a 45% increase in credit card usage from 2007-2008, rising to $9.8 billion in payments.  Again, the major takeaway is that sounder financial systems and infrastructure will lead to increased credit and debit card usage.

What this means for lotteries

So what does this have to do with lotteries? Most lottery businesses in smaller countries of the Caribbean, Latin America and the Asia are small, making them more price-sensitive to credit card transaction fees.  The low-cost of most lottery tickets may also hamper any resolve to adopt a mobile point-of-sale system that would accept credit or debit cards.  So the solution to this problem requires a platform that allows customers to access lotteries from mobile devices and save card information, either by a credit and/or cash account, allowing deposits and withdrawals into an individual account used to play lottery.  A platform that allows lottery platforms to use their local cash transaction and credit account facilities such as LocusPlay would allow an easy transition from paper to digital.

This continual stream of revenue for the business should offset transaction costs.  Lotteries should also look to the widespread, popular appeal of credit/debit to see why they should adopt a mobile point-of-sale system.  Carrying cards is easier and more convenient than cash.  Customers are everywhere, which means lotteries should try to reach out to them rather than waiting for them to come — only then can lotteries maximize their potential.  Picking up on future trends is essential, especially in emerging markets where being ahead of the curve and anticipating customer needs in advance will allow lottery operators to have all the tools they need to capture a larger customer base.  Increased usage of credit cards, accounts and debit cards is a clear trend and should be noticed.

Though moving from a cash-only establishment to adopting a mobile point-of-sale system can be tricky and even a hassle for businesses most indicators point to a long-term payoff.  As technology improves and accepting various forms of payments becomes increasingly easy, lottery operators should take note.  As unique as the lottery industry may be, we are no exception to business trends, especially one as beneficial as mobile point-of-sale.