July 6, 2016
FinTech has established itself as the latest trend in the startup world of 2016. FinTech startups are popping up everywhere, attempting to simplify the complex world of financial services. But with this popularity comes a shift. Banks are realizing the threat these new companies pose and are starting to invest heavily in them. With big companies partnering with small, they are all trying to position themselves right for the future of the FinTech market being created in this very moment.
One such story goes of Swedish payments giant Klarna that recently announced that they were moving beyond its online services into physical stores, which it will accomplish by partnering up with mobile point of sale (MPOS) and e-commerce company Sitoo.
The new offline payment solution will start being tested at stores and chains running Sitoo in Sweden.
At Shopbox, the Danish MPOS startup that I’m a part of, we could be worried about one of our competitors partnering with such a big and influential company as Klarna. After all, it is an industry where partnerships and alliances are defining the future of a company.
Instead, we’re excited – excited about what this means for the payments industry as a whole.
The Future of Payments
We are approaching a near future where the value chain for payments as we know it will be forever altered and new constellations will surface. More specifically, we expect to see more payment providers partnering up with POS companies to add value to their services and to diversify their position. There’s also a strong possibility that we’re likely to see some of the more aggressive payment providers outright acquiring POS-companies to accelerate growth and control a larger chunk of the value chain.
This hypothesis is supported by the significant growth of MPOS, with 38 million mPOS devices expected to be installed by next year; up 200 percent in less than 3 years. Also, MPOS devices are tailored to digitally native small- and medium-size business owners who will be attracted not least by the very low cost in comparison to traditional POS systems but also by a fully integrated digital cloud supported system.
And this is the market where payment providers can really thrive. Nowadays there are more payment types than ever before, making it possible for consumers to complete transactions in whatever way is most convenient for them. Payment providers need to seize the opportunity to be the ideal payment solution for customers. And this comes through entering the heart of the business. The entire POS experience.
As more and more businesses adopt MPOS, the amount of customers completing transactions on these systems increases. For payment providers who charge per transaction, working with MPOS companies will increase revenue and create more valuable customer data. And offering value-added services on top of the payment can increase the ARPU generating revenues from the licence in addition to commissions made on the transactions.
Of course, for the MPOS companies, partnering with a payment provider ensures sales are processed on only one system, making it easier to collect and organize transaction information. Quick and simple transactions allow workers to spend more time interacting with customers and less time worrying about technical issues.
As we see it, there is a necessity of collaborations between POS companies and payment providers. That’s why we’ve begun to integrate with a number of notable payment companies, including Bambora and iZettle in Sweden and Nets in Denmark. We believe that partnerships like these make running a business hassle-free for owners, while also providing a seamless sales experience for shoppers.
We are not worried about a Klarna-Sitoo partnership. It is helping the trend towards a future where payment providers and point of sales systems work together to provide benefits for both managers and customers alike – and that is a future we can all look forward to. Consolidation will take place as mentioned above, but until then let’s have a fun ride transforming the way business owners think about payments.
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