The global digital payment market is expected to reach $236.10 billion by 2028. With much of this growth attributed to the emergence of new technologies, those looking to capitalize on the growth of digital might not know where to start.
Simple to set-up and low cost, SoftPOS solution bridges the past with the future and is perfect for merchants to jump on this trend and boost digital payment acceptance. So what is SoftPOS? And how can it refine the way merchants operate and provide a seamless transaction experience for consumers?
Setting the scene: an introduction to SoftPOS
SoftPOS (Software Point of Sale) is a software-based solution which transforms a regular smartphone – known as Commercial Off-The-Shelf (COTS) device – into a contactless payment terminal. Utilizing the device’s embedded Near Field Communication (NFC) capability, they enable users to download an app, register (select acquiring bank) and begin accepting payments on their personal smartphones and tablets. All without the need for any additional hardware. Transactions are then processed, authorized and reconciled over cellular networks.
Consumers simply make a payment by holding their contactless card, mobile wallet or wearable close to the merchant’s smartphone. These solutions level the playing field for merchants, enabling them to accept digital payments in a cost-effective way and improve customer loyalty. Use cases could range from market stalls and food delivery drivers, right through to larger brick and mortar merchants offering checkout services on the shop floor to help shoppers avoid waiting in line.
As we have seen during the pandemic, digital trends such as eCommerce and mCommerce are accelerating. Likewise, the way consumers make in-store payments is changing. Contactless payments have grown by 40% during the pandemic. And with 54% of consumers saying that they would switch retailers to one that provided contactless payment systems, merchants cannot afford to be left behind.
Similar to traditional contactless payments at the POS, SoftPOS payments provide consumers with a quick ‘tap and go’ experience, making the shopping experience easy and convenient. What’s more, hygiene and cleanliness have become key considerations for consumers when choosing their payment method. The preference for cash has dropped by 31% recently, resulting in more people recognizing convenience of contactless payments. Therefore, the usage of digital payments looks likely to outlast the pandemic, meaning businesses must adapt to changing consumer behaviors.
In comparison to legacy POS solutions, customers must tap their payment card or mobile wallet on a stranger’s smartphone rather than a ‘trusted’ POS terminal. Along with potential trust concerns, this also results in a slightly different consumer experience. For example, the cardholder must feel secure tapping their card or, in some cases, entering their PIN, on the merchant’s smartphone. This may yet be a barrier for consumer adoption, especially amongst those less familiar with digital payments overall. Education on the user experience, security and privacy features will be essential to the success of this technology.
Benefits for merchants
SoftPOS solutions allow merchants to accept digital payments in a cost-effective and simple way, driving digitalization, financial inclusion and boosting their offering for consumers.
Merchants can avoid investing in and maintaining expensive hardware and other required infrastructure, by using any compatible mobile device they already have to simply download a SoftPOS app and start accepting transactions. Deployment simplicity and affordability of SoftPOS, makes it a game-changer for merchants who have previously only accepted cash due to the complexities and expense of setting up traditional POS terminals.
These solutions also provide mobility and flexibility as COTS devices can be used everywhere. This means that pop-up shops and traditional retail stores alike can provide the same seamless payment experience.
An untapped opportunity
It is clear that SoftPOS solutions provide a wide range of benefits to both merchants and end-users, and the potential continues to grow. The idea holds particular promise for 180 million micro and small merchants around the world, where fewer than 10% in many emerging markets currently accept digital payments. This is not to mention the potential to help brick and mortar retailers be more agile and maximize checkout throughput.
And that is just the tip of the iceberg. Future use cases are not limited to traditional in-store payments, but could include transit and even eCommerce, where this functionality could be built into a merchant’s app to allow consumers to tap their contactless card on their own device to make or authenticate a payment instead of entering their card details.
With so much potential, payments stakeholders are looking to make the most of this opportunity and bring their own SoftPOS solutions to market. But, beyond the benefits there are multiple factors at play. In this upcoming blog series, we will explore the complexities of SoftPOS payments, including:
Understanding the hardware considerations,
Getting to grips with the software considerations,
Addressing security requirements and measures.
Stay tuned to learn more about SoftPOS payments, why they are booming in popularity and the considerations for those wanting to implement these solutions.
Learn more about how Fime can help you create tomorrow’s digital payment acceptance solutions.