Installment payments need to be an integral part of checkout

Register now

POS systems have been at the heart of retail businesses for the last decade, having radically evolved from simple terminals designed to take card payments. The modern POS system is indispensable to current merchants, providing the software and hardware to run a successful business while fulfilling needs such as ordering, inventory, staff management, payment and fraud prevention.

The development of mobile POS terminals ensured continued growth across various industries from hospitality to restaurants, as well as retail. According to a recent report, the POS terminal market is expected to reach $108.46 billion by 2025. Advancement in POS technology has provided merchants with increased flexibility and control, as well as greater insight into consumer behavior.

The latest evolution of POS terminals includes acceptance of various payment types, including mobile payments, credit card transactions as well as cash. Cloud technology has been a pivotal extension of POS capabilities, ensuring data is accessible from the retailer’s smartphone or tablet wherever they are. The upgraded SmartPOS is not simply a product, but a hub for advanced functionality going beyond the classic POS that we have known until now.

While POS systems are continually evolving to accommodate these developments, there are still conspicuous omissions. Point of sale financing is currently the payment option of choice for those who prefer to pay over time with the predictability of an installment loan with regular payments in place, compared to a credit card where there is more risk of entering into a cycle of debt. Millennials especially have shunned credit cards in favor of buying even low-ticket items using a system of installment loans, often incurring little to no interest.

Square is best known for providing portable credit card processing hardware, allowing smaller businesses to take payments without having to invest heavily in an expensive POS system. This is essential in the current retail environment, where fewer people are carrying cash, and has ensured the exponential growth of Square in a relatively short space of time.

Staying at the forefront of revolutionizing POS solutions, Square added "Square installments" to their suite of solutions late last year, whereby the customer can apply for financing on their mobile phone, using the unique code received to make the payment on a Square POS terminal. Square is innovating by integrating a consumer finance service within the POS flow. Offering financing should be a basic added value service for any POS provider.

Square's incorporation of value-added services such as financing to its POS system should inspire POS providers to recognize that financing straight from the POS terminal makes a lot of sense. Lenders such as JPMorgan Chase now offer installment loans through their My Chase Plan, and two of the biggest card issuers have joined the field, with Visa launching its own installment loan solution while Mastercard is very active in consumer finance. Logically, POS terminal providers should be the ones offering installment loans as part of the POS structure so that retailers are investing in a comprehensive system that covers all their POS needs.

For reprint and licensing requests for this article, click here.
Credit Retailers Square ISO and agent