Mar 28, 2007

When will we see colour printers on payment terminals?


Verifone and Hypercom both offer high end payment terminals with sophisticated touch screens and colour video capabilities which they hope retailers will use to deliver promotional marketing and advertising messages to customers (see the brochures here and here). But I haven’t seen any colour printers yet. As the credit or debit card receipt becomes richer with targeted promotional offers, the same way that till receipts have become more sophisticated, it is unavoidable that payment terminals will also offer colour printers.

In the US, Catalina Marketing is one of the top providers of promotional marketing capabilities at the point of sale. They recently began upgrading their POS printers to colour, after twenty years of black and white coupons printed at the checkout. Advertisers like the colour printers because of the higher redemption rates, an average of 30% higher than Catalina's traditional black and white prints, which indicates that colour print promotions are more effective at driving customer behaviour. Catalina's targeted promotions delivered at the checkout already have much higher redemption rates than virtually all other mass-delivered coupons (7% versus an industry average of 2%). Another interesting angle is that about 30% of Catalina’s business is ads delivered at checkout, with no coupon or promotional incentive attached, simply an ad printed on a checkout receipt. That ad business has grown as Catalina completes its conversion to full-color printers on all its point-of-sale units.

It will be hard for payment terminal vendors to tap into this market on their own. They need to get their technology accepted by advertising and marketing organizations and actually create a new media, just as Catalina has done. And more than likely, the new media will need to be print based rather than video, which means that colour printers are more valuable than colour video monitors at the checkout. I know technologists will think I am totally insane for saying this, but hey, that's pragmatism. Sure, colour video screens are pretty and nice. But a print ad that the customer walks away with is much more effective in influencing customer behaviour. Notice that Catalina's business is entirely print based, with no video displays.

Welcome’s bank customers are in a way becoming advertising and marketing organizations within this niche, since they build credit card promotional marketing offers in partnership with merchants. This fills an important missing element that terminal vendors lack on their own. There could be an opportunity for a terminal vendor to offer a colour printer option which merchants can choose to upgrade to if they want to print higher quality offers on credit and debit card receipts.

Still, there is one very major barrier that remains. Each terminal vendor has persistently developed their own proprietary environment. If they add colour printers, you can be sure that the printers will function in quirky ways. Technology suppliers like Welcome would need to develop different drivers for each platform, which would necessarily drive the capabilities down to fit the platform that is the lowest common denominator. So the whole richness angle is defeated. Either the industry comes together and defines common standards (don’t hold your breath) or technology providers like Welcome choose one single platform for colour promotional offers. In that scenario, which I kind of like, merchants would be able to choose from lots of different terminal platforms for basic, traditional black and white receipts and promotions, but they would have a single choice of terminal provider for high end colour print promotions.

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