Advances in mobile technology have also permeated into other products, including point of sale hardware. With mobile point of sale devices being updated to include sophisticated software, there is more real-time capture of customer data in the store.

However, there is a trade off. These perks only truly add value if they do not add friction to the quick and efficient processing of payments.

Georgina Nelson, CEO and founder of TruRating
Georgina Nelson, CEO and founder of TruRating.

For many years, the POS terminal was a fairly basic device resembling an overweight calculator. But with the advent of the iPad, the form factor changed radically into a device that was far more versatile, interactive and connected. This technological shift sparked the advent of companies like Square and Clover, which emulated much of the app store model of mobile devices.

Clover, which launched in early 2012 before quickly being acquired by First Data Corp., is representative of the breed — a tablet-based POS system that can process payments, but also has an app store allowing merchants to customize the experience to their needs via apps that facilitate online supply ordering, synchronization with account software, staff time management, inventory management and marketing campaigns. Most of these are back-end tools which can be utilized outside of retail hours, but a growing number of tools capture real-time data on consumers to provide invaluable insights on who is coming into the store, when, buying what and how the customer experience was.

One of these has been developed in-house by Clover, aptly called “Clover Insights,” which provides a diagnostic dashboard of not only the retail sales in a specific merchant’s store, but of how they benchmark against comparable Clover retailers in their area.

“It all becomes the power of the network,” said Rishi Chhabra, vice president of information and analytics solutions at First Data. “We see all these merchants and these payment transactions, so we can say to a merchant, 'This is how you're doing on Sunday morning at 11 a.m. and this is how you compare to other merchants that are around you."”

Using cash for payments, digital for change
That is all well and good for customers that are paying with a traceable form of payment such as credit or debit, but what about the large number of cash purchases?

According to the Federal Reserve Bank of San Francisco, cash is still the primary means of payment for sub $25 transactions in the U.S. For convenience stores and quick service restaurants, that means no data is being collected on these individuals unless they can be convinced to be brought into a more digital ecosystem — but what’s the incentive?

CoinOut enables people who pay cash in retail stores to get their cash back digitally to its app. From there, users can send the balance to a bank account, transfer it to an Amazon.com gift card or donate it to charity of their choice. While reducing the burden of handling small change for both parties, the app also provides a means for this cash-paying base to participate in digital offers and promotions from the retailer. CoinOut features a virtual tip jar and offers cash back that ties to the number of transactions.

However, most important of all, CoinOut allows retailers to capture important data on cash-paying consumers. The system is used by some Subway restaurant franchisees in New York and enrollment is handled via a call-to-action QR code printed on receipts.

“The product we have at Subway is our 'cash back' that gives customers a reward they can claim through our app by scanning the receipt with our integration with Epson printers,” said Jeff Witten, CEO of CoinOut. “It has zero impact to the line, since it happens post transaction … Individual franchise owners have the ability to promote specific deals to their CoinOut customer base, giving them more control of their business. Merchants can see their CoinOut sales and visits in real-time via the CoinOut app.”

According to Witten, CoinOut enrollment has occurred with 5% to 15% of cash transactions at these Subway locations, with merchants motivated to promote enrollment and engagement with their cash-paying patrons.

Waiter, there’s a fly in my data
While identifying the customer is important to business growth, being able to gauge customer sentiment to deal with problems as and when they occur is critical.

This could occur in a face-to-face interaction between staffers and shoppers, but in this digital age it is more often provided as digital feedback, such as the much-feared angry Yelp review. However, there are a couple of issues with this — firstly, the feedback could occur days or weeks after the event, diminishing the opportunity for corrective action. Secondly, the 1% of people who write Yelp reviews are the kind of people who write Yelp reviews — hardly a cross section of the greater consumer population.

A number of apps for POS terminals are designed for this purpose. These include Tattle, which caters to the restaurant segment for post-transaction feedback; and TruRating, which is designed to be used in parallel with the checkout process.

“Just before you pay for something you get asked one question on an aspect of your experience,” said Georgina Nelson, CEO and founder of TruRating. “You could get asked about the service, the product range, whatever.”

Service has been used across a variety of businesses, from restaurants to car dealerships, and case studies indicate a positive impact on the bottom line. According to Nelson, businesses that tie their staff feedback to TruRating scores have seen an increase of 8% to 11% in revenue. It is also unobtrusive, which helped a London fast casual restaurant called Ping Pong capture 4,000 weekly ratings during a 7 week trial.

“If you can make it really quick and easy to give feedback to a business, and if you can pair it with a payment then you get validated, trusted, representative feedback," said Nelson. "Because you've done the integration with a payment app, you get the transaction data and in the U.S., you collect all the SKU level product data as well, which provides real insights that can be fed back to the business.”

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Nick Holland

Nick Holland

Nick Holland is a senior analyst at PaymentsSource. He has previously held analyst roles at Javelin Strategy & Research, Yankee Group and Aite Group.