“And that’s the job of a good payments service provider, keeping the technical complexity invisible, while delivering the service in an industry benchmark time of 130 milliseconds,” explains Bosman.

He says that a decade ago, two or three seconds were considered acceptable. Today, he says, anything more than half a second causes customers to become frustrated.

“A payment provider obviously serves other businesses. In Ecentric’s case, we serve retailers. In fact, we have settled more than R10 trillion in payments, including the card payments for two-thirds of JSE-listed retailers. But what this means is that we also serve the customers of our customers – millions of people expecting, demanding, near-instant payments that work as they should, every time,” says Bosman.

He adds that while the service is designed to be invisible, it is highly complex.

“There’s far more going on than simply tapping a card or hovering a smartphone over a payment device. There’s an entire ecosystem of highly complex steps taking place. Every step in this process needs to happen so quickly that the wait is almost imperceptible to the customer,” says Bosman.

Describing the “anatomy of a payment”, Bosman provides a simple analogy for a complex process. “Those 130 milliseconds encompass the anatomy of a payment. The simplest analogy in layman’s terms is to imagine an onion. Each layer, from the outermost to the core, is critical in ensuring the merchant’s customer walks away happy, keeping the merchant happy.

“The layers encompass legitimising the card and user the second they interact with the till, world-standard encryption and security for data travelling over the internet, authorisation and fraud checks, clearing and settlement between the customer’s bank and the retailer’s bank, all of which is underpinned by extensive compliance and ongoing certification,” says Bosman.

Bosman explains that the steps covered in those layers include the customer tapping, swiping or inserting at the terminal, the terminal sending transaction data through the payment switch, which then routes the encrypted request to the customer’s bank (which is called the issuing bank), the issuing bank then checks for funds and runs fraud and security checks before sending an approval or decline response back to the payment switch which, in turn, returns the response to the terminal.

If declined, the transaction ends with a decline code, but if it is approved, the transaction details are sent to the retailer’s bank, which is called the acquiring bank, for clearing and settlement.

“So, in a very short amount of time, and preferably within those 130 milliseconds, there are a lot of complicated steps which all form part of the ‘onion’ analogy, they happen in layers.

The core of the onion is ensuring all these steps occur within a payment card industry data security standard (PCI DSS)-certified environment.

This is a global security standard. Certification with this standard is not a once-off process. It requires annual, intensive audits and covers people, process and technology. Additional certifications, such as those for devices and ongoing validation, are required. It is this continuous compliance that underpins trust and allows the payment ecosystem to function securely.

“When this doesn’t go according to plan, the customer is frustrated, the merchant is unhappy, and the reputation of the payment service provider suffers. And so, it is important for retailers to carefully consider the partner they choose to work with when planning their payments. A lot can go well, but equally, a lot can go wrong in just milliseconds,” says Bosman.

Traditionally, these devices have been viewed merely as payment acceptance tools, but they hold the key to unlocking a wealth of opportunities for businesses willing to look beyond this limited perspective.

The evolution of POS technology presents a pivotal moment for SMEs. When integrated with a comprehensive banking relationship, these devices can be transformed from simple transaction processors into powerful business enablers.

This shift can be particularly significant when the POS solution comes from a bank, as it can form part of a comprehensive and holistic view of the business and its entire financial landscape, rather than just being a payment device.

With their deep understanding of their business clients’ financial position, needs, and potential, banks are uniquely positioned to leverage POS data to solve many of the challenges that SMEs typically face.

This comprehensive insight enables the creation and seamless delivery of tailored solutions that address the specific pain points of each business.

One of the most significant advantages of this integrated approach is the potential for capital advances based on POS sales, which can revolutionise cash flow management for SMEs.

By providing access to funds based on real-time sales data, banks can help businesses optimise their cash flow, take advantage of growth opportunities, and navigate seasonal fluctuations with greater ease.

This has the potential to be a game-changer for many small businesses given that liquidity issues are one of the main reasons why many SMEs struggle to stay afloat.

Beyond capital advances, an integrated POS solution can address several other critical challenges faced by most SMEs. For instance, it can help streamline the reconciliation process, providing real-time insights into sales patterns and financial performance.

This data is very useful in terms of informing inventory management decisions, helping businesses buy and hold stock efficiently and reduce waste and risk.

What’s more, the integration of POS data into the broader banking relationship can enhance credit assessments.

With a clearer picture of a business’s cash flow and sales trends, banks can make more informed lending decisions, potentially improving access to credit for SMEs.

The self-service capabilities of modern POS solutions are also a key benefit. The ability to manage accounts, resolve issues, and access detailed reports through digital platforms empowers business owners, saves them time and provides greater control over their financial operations.

Finally, another often-overlooked benefit of a bank-supplied POS system is the valuable customer insights these devices offer the business and its banking partner.

By analysing transaction data, businesses can gain a deeper understanding of their customer base, enabling more targeted marketing efforts and improved customer service.

These insights are also invaluable in deepening the value that the bank can offer the business. It gives business bankers great insights that they can leverage to tailor enabling business solutions and offer business growth and expansion advice.

Ultimately, the true value of a POS device provided by a business bank lies in its ability to facilitate a more holistic and integrated financial partnership.

Through a comprehensive view of the business’s financial health, it enables the bank to offer more appropriate solutions, underpinned by tailored and timely support.

In other words, a POS device provided by a bank with a full understanding of the business becomes a gateway to a more sophisticated, integrated approach to financial management.

This evolution takes payments and financial management to the next level, transforming them from necessary business functions into true business-building enablers.

For SMEs looking to thrive in an increasingly competitive landscape, embracing this new paradigm of POS functionality could be the key to unlocking their full potential.

By viewing POS devices as strategic tools rather than mere conveniences, businesses can leverage their banking relationships more effectively, paving the way for enhanced financial management, improved decision-making and, ultimately, sustained growth and success.