It’s an exciting time for payments. Innovation is buzzing, driven by rapid technological advances. Although it can still be baffling at times, seeing legacy Point of Sale solutions still being used, it’s encouraging to know that more and more merchants are embracing the new wave of POS systems. These merchants have dismissed the old cashier systems which were bulky eye sores and only capable of managing inventory, to welcoming more modern, sleek systems that go well beyond everything we have known before.
But just as it can be a slow process for merchants to adapt and accept change, companies within the payments community can also be averse to the shake-up occurring. It’s no secret that the payments space has always existed with an organized and clearly defined flow. Each channel survives by having its own unique role, but as of late we’ve seen continuous channel overlap and role sharing. This has tested many companies, as they’ve had to become flexible and adapt to their new environment; one with no limits and constraints on what can be done. Business models are being challenged, but the best-of-the-best have creatively found new revenue streams and new business functions to help ease the transition of roles.
A great example of this has been Value-Added Resellers. VARs play a vital part within the Point of Sale (POS) market by offering complete turnkey solutions — adding features and services to an existing solution and selling it as an integrated product. VARs not only package software and hardware for a business’ payment system, but they also provide services such as training, product maintenance and technical support, ultimately offering their clients a one-stop-shop for all their IT and POS needs.
So what are VARs doing differently? The most influential move many value-added resellers have made has been to expand their reach. Once heavily focused on the retail segment, many VARs have broadened their scope and have started to focus on small and midsize businesses (SMBs) across multiple industries. This has opened up a great opportunity for growth as there are many untapped merchants needing assistance with their Point of Sale solution. Depending on the statistic you refer to, SMBs make up between 90% & 99% of all businesses within the EU. That’s over 21 million potential clients.
But why SMBs? Online based boarding and acquisition models for POS solutions have fueled and catalyzed SMBs into becoming one of the biggest growth engines in recent years. However, some SMBs are still left overwhelmed by the abundance of options. They are turning to VARs to partner with who understand the technology landscape as well as individual needs. Today’s SMBs want not only a trusted solutions provider, but also a creative problem solver. This means VARs are having to spend more time understanding their client’s business and finding unique ways to support them.
This is one way VARs are building better and longer lasting relationships. Just as SMBs are becoming heavily dependent on VARs, VARs are just as reliant on SMBs to keep influence within the POS value chain. VARs have become one of the fastest growing SMB distribution channel for merchants, a change that happened at the expense of traditional ISOs.
But why is this important? There’s a growing number of end-users who prefer working directly with one stop solution providers. Through VARs they can receive a complete business solution which usually comes with a vast degree of industry specialization. Time is spent learning the business of the client in order to package the best solutions together to fit their needs. Because of this, many VARs and SMBs are forming long lasting partnerships which extend beyond the Point of Sale. From software developers to payments processors, there’s an increased awareness of the VAR distribution value due to their new bond with SMBs.
What does this mean for the Point of Sale? SMB merchants have been some of the first to take on new Point of Sale technology. As more merchants take on these modern POS systems, they recognize the benefits which help them support their business. Recent POS technology advancement has made enterprise-quality systems available to merchants of all sizes and across any industry.
In the end, we all want our technology and products in the hands of as many merchants as possible. Channel partners are looking for the value-added resellers with the best distribution channel and currently VARs are providing that through SMBs.
The value chain at the Point of Sale is completely changing. Clear-cut roles within the payments industry have disappeared. Each channel has to find new ways to stay relevant and take advantage of opportunities for new business plans. We all have to stay flexible and accept the changing times as they come. Not only are we advancing the technology used for payments but we’re continuing to advance as an industry. Gone are the days of a static, highly structured environment. We’re all being challenged to constantly evolve and re-evaluate our strategies and the work done by VARs is a great example of how this can help move the industry forward.
Written by the Payworks Team
First published on PaymentEye on 15-03-2017