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SOFTPOS PAYMENTS: GETTING THE SOFTWARE RIGHT

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By François Drouard, SLM Terminal & Mobile and Emmanuel Desdoigts, Project Manager at Fime

 

In today’s frequently changing payments landscape, stakeholders are embracing new technologies to reflect shifting consumer behaviors. One such technology is SoftPOS, a solution which uses Commercial Off-The-Shelf (COTS) devices to accept contactless payments. In fact, 41% of small business owners are investigating the possibility of accepting payments via mobile device.

The process of setting up these solutions for merchants is relatively simple – it is a case of buying a compatible device (or using the one they already have!), downloading an app and enrolling with the back-end system to obtain the valid account credentials. However, for those creating the software, it is not so simple. There is a variety of considerations that developers need to keep in mind when developing these solutions, ranging from the technical to the practical. This blog explores the technical complexities, compliance factors and functional challenges to overcome for those wanting to bring their SoftPOS solutions to market.

 

A solid foundation

SoftPOS solutions allow merchants to accept contactless payments directly on their smartphones or tablets. Today, these solutions can only be implemented on Android devices.

When developing a mobile payment acceptance solution, developers must effectively create two completely different systems that work seamlessly together. There is the back-end system, including the attestation and monitoring server as well as the payment gateway which handles the actual payment transaction. Next, there is the local component (mobile application) which contains the user interface and manages the connection to the backend.

There are multiple software components which must work together to create these systems. Firstly, the payment kernel provides all the necessary processing logic and data that are required to select and process a card application (using NFC technology). This can be included in a software development kit (SDK), which can be provided by a vendor or a payment scheme. There is also the merchant application which uses the card processing kernel/SDK API and the connection to the back-end system and terminal management system. Finally, there are multiple security modules to fulfil the requirements defined by PCI CPoC™, including the connection to the attestation and monitoring server in the back-end system.

For developers new to making payment acceptance apps, creating all of these different components and ensuring that they function effortlessly can create challenges. Difficulties could range from understanding the roles and responsibilities of all of the different actors in the payment ecosystem, to grasping all of the individual components of the transaction flow. Beyond this, there is the issue of anticipating potential problems that could interrupt a transaction. For many, this will be a whole new world of nuanced complexity.

 

Satisfying multiple requirements

To ensure that software used to accept SoftPOS payments is secure, functional and interoperable, there are a number of requirements that need to be met. Multiple components of the software for SoftPOS solutions need to be tested:

  • The functionality of the app.
  • The compatibility with the mobile device it is running on.
  • The interoperability and performance.
  • The terminal user interface.

Primarily, developers must ensure that it is compliant with the payment schemes’ Level 2 requirements. This certification is concerned with the validation of the software that implements the payment functionality and that runs on COTS devices (which can achieve optional EMV®* Level 1 certification) or in the cloud. This software is independent from the hardware and is referred to as a payment kernel for each payment scheme. This is the same certification process that legacy terminal vendors need to achieve, with the requirements that have been adapted to suit SoftPOS solutions.

Additionally, the solution must also achieve compliance with the PCI Contactless Payments on COTS (CPoC™) security and test requirements, which ensure that payment data is protected in both the software application which initiates the transaction, and the independent back-end system. This standard provides merchants with confidence in the security of their solution through a combination of security controls built into the merchant application and ongoing monitoring and integrity checks performed by the back-end systems.

One complicating factor is that each payment scheme has its own specific way of accepting and processing contactless transactions. Developers need to ensure that their apps and embedded kernels are compliant with multiple schemes.

 

Challenges to overcome

Getting the testing right to ensure that solutions are best-in-class is fundamental for many reasons. SoftPOS solution providers are not only competing with their peers, they also have to work commonly with the existing platforms and architectures in place for traditional POS providers. Recreating the quick and easy contactless experience that consumers are familiar with is the goal. One particular feature that can be vital to the success of a SoftPOS solution is the speed of transactions. If the payment cannot be made and authorized quickly, the benefits of contactless cannot be realized and ultimately the product will not live up to the merchant’s or the consumer’s expectations.

Another hurdle is that these solutions may not yet support PIN entry, so contactless payment caps can apply in each country or region.

 

The good news? 

We anticipate that specifications to support PIN entry will be released in PCI CPoC™ in 2022. In the meantime, apps in development have to follow the security requirements defined by the schemes. So any apps in development now should have this in their roadmap if not yet implemented.

Finally, SoftPOS solutions without shielding application technologies are potentially vulnerable to attack, and payment processing data can be exposed. SoftPOS solutions cannot benefit from the hardware-backed security foundations that legacy POS devices can.

Therefore, strong security needs to be built in from the first stage of the design process to ensure safe transactions and inspire consumer trust. In the next instalment of this blog series, we will explore the different security options available to solution providers and OEMs wanting to launch their SoftPOS products.

 

You are not alone though. 

With a number of factors to consider, it can be difficult to know where to start when bringing a SoftPOS application to market. Solution providers and app developers cannot be expected to know everything about the market, specifications and evolving requirements, and upskilling can require significant investment in time, headcount and money. You are not alone though. Our experts work daily to stay ahead of the market and have extensive technical expertise in defining, designing, delivering and testing solutions to take the complexity out of compliance.

 

Business

Hidden channel costs: how to find and tackle them

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By Mark Wass, Strategic Sales Director, UK and North EMEA at CloudBlue 

 

Growth for businesses will always be a key objective. However, in this digital age, if it occurs too rapidly, it can often unearth cracks that harbor hidden costs and pre-existing efficiencies.

 When it comes to channel distribution, for the majority of partners, hidden costs are widespread. A lot of partners work with multiple channels and systems, and this can become complicated. It can also affect their ability to track information.  On average, 30%-40% of IT spending  in large enterprises is accountable to inefficiencies caused by shadow IT.

 There is no single root cause of hidden costs. An array of issues such as wasted resources, labour, time constraints, poor implementation oversights and maintenance issues are all contributors, and the cuts only get deeper as partners scale. Here are the ways service providers can eliminate hidden costs.

 

Where to look for hidden costs 

 In general, unaccounted, or unattributed costs originate from four areas, with the first being shadow IT.

 Shadow IT is the use of systems, devices, software, applications, or services without explicit IT department approval. The phenomenon has grown in recent years due to the adoption of cloud-based applications and services, with the average company using 30% more unique SaaS (Software-as-a-Service) apps than they were in 2018. Thanks to the ease of adding new software, departments are going it alone and buying platforms that can be niche, or duplicate processes, and even in some cases using multiple versions of chat apps to communicate internally. 

Mark Wass

The next hidden cost stems from implementation and integration. Channel partners need to work within different systems, and almost always underestimate the budget needed to work with new software solutions. A consistent blind spot across the industry is the inconsistency of implementation and integration at budget.   

In terms of maintenance, it is especially difficult when partners create homegrown software to handle provisioning, relationship management, or data management. While such proprietary software might perform well for initial purposes, maintenance and upgrades can be a nightmare. Likewise, internal knowledge transfer in this situation is crucial.  

And finally, the scalability of expanding from one market to the next is not linear and neither is the cost. Partners that have already launched in one part of the world often think that it will cost around the same to expand into another region, like between the US and Europe. However, this thinking does not consider the additional effort to contend with the new currency, language, audience, and regulation, as well as local operations within the region.  

 

Tackling hidden costs  

The good news is that there are multiple remedies to hidden costs. Integrations, for example, successfully bring together disparate systems and improve efficiency. Partners that have manual processes and pull information from one system before typing it into another are wasting time and resources by dedicating an entire person to this process. Clearly, this should be automated to cut down on human errors and save in the long run. 

Along with integrations, partners should purchase software with scalability and unification at heart. There is no magic platform that does everything entirely so companies should opt for the best of breed, even if the initial investment is a bit more. This will help to offset the concerns of scalability, maintenance, lack of expertise, and potential unforeseen overheads. Moreover, best-in-class platforms help to paint a consistent long-term picture of the health of channel operations. 

For channel health, it is also integral to integrate outside experts to perform an overall business diagnostic. These can be consultants, solution architects, and those alike that know channel software and best industry practices to help architect a scalable and efficient platform. Working in conjunction with the team, these objective outsiders work to find the gaps and tighten any software screws. 

 

Helping the channel by combating inefficiencies

Hidden costs can become widespread, and this can lead to channel partners paying up to twice the price for half the output.

 More than the financial downside, though, hidden costs should be thought of as hidden inefficiencies. Especially in today’s accelerated digital transformation, inefficiencies can make or break fast-growing channel operations. Therefore, weeding out hidden costs with improved efficiencies can work wonders by saving budget and running a tighter ship. 

 Integrated software and platforms can then be used for change. By unifying and standardising existing systems, managers receive a single view of contracts, reporting, sales, marketing, and day-to-day operations. This  provides them with the right tools to achieve sustainable growth. Rather than overwhelming teams with several types of platforms and software, this single operational view allows for the much-needed oversight that is necessary to set a business up for success. 

 It is essential for channel partners to seize the moment and eliminate the perils of hidden costs, especially given the rapid growth of businesses in the digital and cloud spaces.

 

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Automation nation: Liberating workers from desks, data entry and the doldrums

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By

Gert-Jan Wijman, VP of EMEA at Celigo.

 

Just when businesses thought the tough times were over, even more challenges ensued. While still recovering from the financial effects of the pandemic, companies were hit with an economic downturn that’s now resulted in a recession in the UK.

In this economic context, teams are being forced to do more with less. This means onboarding with reduced manpower, delivering ground-breaking marketing campaigns with less budget and mitigating outlay in the middle of a cost-of-living crisis. Being nimble and streamlining operations has never been more imperative.

That’s where automation comes in. While automating before the recession would’ve been the ideal scenario, it’s never too late to get ahead of competitors. It’s only a matter of when – not if – automation becomes standardised, as businesses insistent on using legacy tech and manual processes will be outpaced by those savvy enough to embrace smarter alternatives. In fact, it’s predicted that in just two short years, 70% of large global enterprises will have over 70 hyperautomation initiatives.

For finance teams and the tech-strapped CFO in particular, automation can be a saving grace. Tech stacks are more complex than ever due to the proliferation of specialised finance SaaS applications for quote to cash, Accounts Receivable & Accounts Payable (AR / AP), cash management, tax, accounting close and corporate performance management. Having the tools to automate these processes enables modern CFOs to adapt to changing tech needs, scale quickly and future-proof their organisations.

Automating today to prepare for tomorrow

Too often, automation is viewed as a job killer. We’ve all heard the apocalyptic narratives about ‘robots taking over,’ but that’s an outdated notion. Instead, automation is a job enhancer. Not only does it minimise errors, speed up processes and help businesses cut down on admin, it liberates employees to dedicate their time to be more creative or perform complex tasks.

Take a company like WeTransfer, for example. Bogged down by manual processes, the team struggled with closing financial books and completing billing cycles on time. After integrating its tech stack, quote-to-cash automation worked immediately and the time to close reduced dramatically, significantly reducing the hours dedicated to manual data entry.

Its revenue accountant was then able to work on core tasks in the finance department and alongside sales operations on the process improvements, no longer worrying about completeness issues associated with the sales and financial systems integrations.

Not only that, it liberated employees physically and unlocked access to more valuable talents. Beneath all the technical and monetary benefits, these are the core principles behind why automation will soon become impossible for firms to ignore.

Physical Liberation

Hybrid work has been one of the biggest positive developments driven by the pandemic. However, while employees surely won’t miss long commute times or the constraints of office life, a disparate workforce comes with challenges. It’s vital that organisations can trust their data and business processes in order for effective collaboration to be possible.

Automation can enable this, as it allows cloud-based systems to share data across a business through integration, ensuring all workers have access to the resources they need to work together effectively wherever they are.

This makes businesses nimble, able to operate across multiple locations when needed and well equipped to decouple entirely from headquarters if needed. Workers can then be as effective from home as from the office, ensuring they can maintain a better work-life balance without compromising productivity.

It’s no wonder then that 78% of organisations worldwide think remote working will increase the proportion of their workforce using automation, while over two-thirds (71%) that have already implemented automation are beginning to feel the benefits.

Liberating Talent

Automation also ensures talent is no longer wasted on manual tasks. 3 in 5 (60%) occupations could technically automate more than 30% of their tasks, highlighting the bevy of possibilities and offering a glimpse at the future of work.

When workers spend their time crunching numbers and organising spreadsheets, it’s easy for them to feel like a cog in a machine. With automation, however, they have more room to share their ideas and feel connected to the operations of the business.

With menial tasks taken out of their hands, employees are freed up to perform more complicated and creative jobs, the sorts of work that could never be automated. And by filling workers’ days with more of these engaging responsibilities, they’re able to feel like they have a real stake in the company’s success.

There is also research to suggest that workers can get as many as 100 hours a year back as a result of their manual tasks being automated, meaning everyone could get an extra two weeks of paid leave without productivity taking a hit.

Automating into the future

Already, over 80% of organisations self-report increased or continued investment into hyperautomation initiatives. So the appetite is there, now comes making it a reality.

Automation at scale is the dream, but the transition won’t happen overnight. In a perfect world, organisations will be able to assign all manual and tedious tasks to the machines, with employees only needing to provide oversight when necessary, but there’s a journey to get there.

That’s why it’s critical that CFOs collaborate closely with their CIOs. Only then can we realise a scenario where manual processes are eliminated entirely, and data across systems can be accessed and updated in real-time. But this will require leaders to understand each other’s needs and challenges so they can align their visions.

As organisations become more disparate, this partnership will only grow in importance. CIOs can empower the CFO and their teams to implement the automation initiatives best for them, with IT maintaining oversight to ensure compliance.

With the right structure and mindset, CFOs and the entire C-Suite can be encouraged to pursue digital transformation in a way that’s most effective for them and the entire organization.

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