Present and future of POS-terminals in merchants smartphones (NFC and QR)
As the contactless technologies slowly but surely take over the conventional methods in many spheres, the need of infrastructure modernization becomes evident POS terminals serve merchants for almost four decades, manufacturers have upgraded the technological base and design quite a bit, however, the core principle is the same. The old-school process may be unsatisfying in mobile and IoT era. With the revolutionization of payment technologies, financial market is also reinventing itself, introducing new approaches to familiar processes. This also includes payments at POS, which slowly but firmly approach mobile devices.
Many companies on the market offer mPOS (mobile point-of-sale – a smartphone or tablet which is able to accept payments) solutions for smartphones and tablets. That’s because small and medium businesses are ready for payment innovations. The reasons for introducing mPOS are clear: simplicity of mobile device solutions; no restrictions on placing of the store: payments can be accepted anywhere; no need to deploy additional banking network. Moreover, mPOS enable a versatile approach to the sale of goods and services as sales consultants can serve as cashiers, reduce queue, and even boost sales and decrease the investment cost. According to Chris Morse, director at PayPal, in the nearest future mobile POS terminals can fully replace present-day payment methods among small and mid-sized businesses.
mPOS today – dongles and QR
Technically speaking, modern POS terminals at cashier desks and wireless POS terminals are quite mobile. However, they can’t be considered as ‘mPOS’ because they lack the main element – a smartphone. ‘Real’ mPOS slightly differ in design and approach and can be assorted into two main groups: additional hardware+software or software-based only.
Let’s start with the first group which includes dongles and tablet POS. Dongle solutions are fairly common in certain markets, especially in North America. They’ve emerged near 2010 with the globalization of modern touchscreen smartphones and became rather popular as affordable, simple to understand and use solutions. These devices are attached to a smartphone or tablet, transforming it into a card reader. Companies like Square or PayPal Here, to name the most known and popular dongle solutions, provide the digital platform that processes payments, and dongle-readers most of the time are free when a merchant uses the specific platform. Besides the ease of use and convenience (compact, support Android and iOS), mPOS dongle solutions provide additional values to a merchant: invoicing, inventory management and barcode scanning, and in some cases custom text message receipts. This creates a closed all-in-one ecosystem for small or medium business owners.
Tablet POS (docking station for a tablet) are most common in restaurant business since the solution allows for a more sophisticated and advanced modern approach, providing additional functions like connection to a remote printer in the kitchen, self-ordering for clients, and cloud features like alerts, online ordering, reports. However, this system requires additional customization and setup to fulfil needs of specific restaurant.
As for the software-based mPOS, the main direction, which has prominent development, is QR-based payments. The technology has been on the financial market for quite some time, enabling merchants to receive payments via a smartphone, tablet or even through stickers with QRs. Visa first launched its mPOS program in India for small business and merchants who have no resources to fiddle with complicated bank systems and banking networks to process cashless transactions. The program is also fully operational in Kenya and Rwanda, where it competes with the largest P2P money mobile platform M-Pesa, and will be soon available in Egypt, Ghana, Indonesia, Kazakhstan, Nigeria, Pakistan and Vietnam. Mastercard isn’t lagging behind, offering the Masterpass QR program, which is similar in its core. Both systems require merchants to register an account and then use mobile applications, supported by their banks, to generate QR codes and receive payments. Customers should also install and use a compatible with mVisa or Masterpass QR mobile app, a mobile wallet or all-in-one digital banking to actually pay for services and goods. Moreover, they ought to be a client of a bank which supports QR-payments program. QR payments are widely available in Asian and African countries, where mobile payments are on the rise.
mPOS based on NFC
QR is only one prominent example of contactless payments approach. But what about NFC payments between two smartphones? In short, not much. As of today, to receive an NFC payment contactless-enabled POS terminals are used. Other direct contactless payments – mPOS solutions are being developed. First of all, there’s Pri-Num’s Digital Enablement Platform which offers a versatile and secure digital solution that among other features enables contactless peer-to-peer payments between smart devices with a mobile wallet app. And then there’s Mastercard with Mobeewave and pilot project in Poland: enabling merchants to receive contactless NFC payments directly to the smartphone. The project will last until summer 2018 and involves up to 500 small businesses. A fully operational solution can be estimated to emerge sometime in 2019.
The future of mPOS is in the transformation of smartphones and tablets into devices that can directly accept payments, and benefit both merchants and customers. QR codes are the most viable and fast-growing payments solution, that requires minimum to zero effort from a merchant as for now. And with the financial market maturity, direct NFC payments will be widely accepted as well.
Topics: contactless, mPOS, nfc, payments, phones, QR