Roland Thompson is the director of United Kingdom-based Stream Retail, a provider of digital signage, POS and self-service solutions in the retail vertical.
From a European’s perspective, it is often useful to look to the United States to get a read on likely trends, particularly in the self-service and kiosk industry, as recent figures suggest that more than 50 percent of the worldwide installed kiosk base is in the U.S.
And given today's economic backdrop, we Europeans are keeping a much closer eye on events in the U.S. than before. The old adage, "If the U.S. sneezes, Europe catches a cold," underscores our recent troubles, and as recovery takes hold, we hope activity in the U.S. will give us Europeans a glimpse of the future as we recover from this flu.
And the market conditions for self-service kiosks in the U.S. seem to be very good. The recession is mostly over, but companies will continue to try doing more with a smaller staff. Competition among retailers has never been so high, so an innovative customer offering is important.
Stores are turning to multichannel retailing, and with the kiosk playing an important role in the mix, a greater variety of applications and uses are emerging. The kiosk is no longer just an information tool — it is becoming a transaction tool too.
Kiosks that can take payments — fantastic! This functionality makes kiosks truly useful and increases their appeal 100-fold. Information-based kiosks are fine, but they can only ever take over an isolated part of the retail customer experience. Give them payment functionality and they become a proper retail partner, working alongside the traditional channels like a true team player.
Thus, any European would conclude from their U.S. crystal ball that economic conditions are conspiring in the kiosk’s favor and the scope of its application is widening and driving the industry forward. So we should start preparing to scale.
Or should we? Is what is happening in the U.S. something we can rely upon to happen in Europe? One fundamental difference between the two continents significantly changes the landscape — the rules and regulations governing the ways payments are managed.
The rules governing card payments in European countries are far more stringent than those in the U.S. The main driver is fraud prevention, and it has led to the introduction of chip-and-pin technology for all debit card and credit card transactions that are not Web-based.
There will soon be 40 countries worldwide using chip-and-pin, with Mexico and Canada next on the list to adopt the technology. But as of yet, the U.S. has made no commitment to follow suit. Many banking officials in the country say it does not have the levels of fraud that other countries have to warrant this adoption. Pressure for U.S. banks to make the change is mounting, however, particularly since U.S. citizens are finding it more and more difficult to use their credit and debit cards abroad, since they are not chip-enabled.
So what does this mean for the kiosk? For now, it means that the U.S. is unencumbered by the payments hoops that Europeans and other chip-and-pin countries have to jump through — and there are many.
For example, to allow a “European-style” credit or debit card payment to take place at a kiosk, a deployer must decide upon a chip-and-pin device and then find a payment service provider that has the accreditation to work with that device. Once housed in the kiosk, the payments solution needs the accreditation of the bank acquirer. This final stage is time-consuming and expensive, which means running trials and proving the business case is risky.
On a positive note, there are payments service providers who are getting blanket accreditation to work with all acquirers using a particular chip-and-pin unit. But there are other hurdles. During a recent deployment in Holland, for example, we found that the chip-and-pin device we use in the U.K. was not up to standard, as the LCD screen was too close to the pin pad. Also, the required hardware itself is expensive and changes the whole slope of the business case to a more shallow, marginal one.
Conversely, things are much simpler in the U.S. Many applications, for example, allow retailers to accept a touchscreen signature for a card-based transaction. If you have ever used a stylus on a touchscreen, then you will know your handwriting degenerates into that of a 5 year-old's and looks nothing like your signature. Furthermore, a simple swipe of the card at a kiosk is all that is required to authenticate a transaction in an unattended environment.
Without a doubt, the U.S. has it easy when it comes to offering transactional kiosks, and U.S. deployers will continue to see good growth in this area until the rules change. Opinion is divided on whether chip-and-pin will be introduced in the U.S., but we believe it will begin to be adopted within three to five years, at which point there is likely to be a marked decline in the deployment of transactional kiosks.
Meanwhile, we Europeans will continue to forge a path though the payment jungle and do our best to build kiosk networks that are transaction-based and not just information-based. Who knows, we may even show the way for once and have our American cousins learning and following our lead.
