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The battle for the POS experience heats up

July 20, 2022

Close up portrait of cheerful young woman making payments by mobile phone on shop register while female manager staying beside
Jonathan Bennett, Chief Commercial Officer

Jonathan Bennett

Chief Commercial Officer

Shopify recently announced the availability of the Shopify POS and integrated hardware, Wisepad 3, to merchants in Singapore, an important regional retail and tourist hub in Asia. Shopify merchants will have access to a single back office that will let them manage products, payments, and customers across all the places where they sell, in-store and online. The global POS terminal market was valued at US$84.1 billion in 2021, slated to grow to 175.2 billion by 2030. APAC region is estimated to have the maximum share in the global POS Terminal market, followed by the Americas & Europe. Also, the new emerging markets in the APAC region will witness the fastest growth rate in the forthcoming years.

According to a recent report[i], the Fixed POS segment is expected to hold the largest share in the POS Terminal market in the year 2027 due to the increase in growing installation of fixed POS like fixed-mount scanners, touch computers, and cash drawers in industries such as transportation, manufacturing, retail, hospitality, where merchants have to deal with high volumes. These factors will be pushing the demand for fixed POS systems globally during the period.

Around the world, two main types of POS terminals are used for mobile payment acceptance. One is the NFC-based terminal, mainly used in markets where payment cards were the most common form of cashless payment. The NFC data transmission format is also adopted by mobile wallet providers using the NFC chips on the back of mobile phones to enable payments with mobile wallets or mobile phones (through in-built NFC chips) used as POS terminals to accept payment cards. Apple acquired Mobeewave, a Canadian company that uses an app to allow mobile phones to accept payment card transactions.

Another system widely adopted outside of the Western markets is the QR payment system, and mobile wallets such as Alipay and Grab Pay are some of the most commonly known QR-based mobile wallets. QR-based payment systems are slowly becoming popular in markets where mobile payment adopted the NFC format. Wallets like Venmo in the US use the QR format for proximity payment acceptance. In Japan and South Korea, consumers can pay for physical goods with direct carrier billing using the QR-readers at points of sale.

POS terminal systems have evolved from transaction-oriented devices to systems that can integrate with the merchant’s customer relationship management system. This evolution has empowered merchants with business intelligence to better manage their revenue streams and inventory. On the other hand, POS terminals may also be prone to identity theft and credit card fraud. The hardware leaders have been working on addressing safety concerns by adding more robust authentication and fail-safe features. FIS, NCR, Ingenico (Worldline), and Verifone. However, companies like Square (Bloc) and Zello have managed to grow beyond the incumbents in select markets.

Happy couple using mobile phone and making contactless payment in a restaurant.

The market is slated to evolve rapidly now with Apple beta testing tap-to-pay that may make physical POS systems redundant. Adyen recently has become the first to widely distribute a new generation of Apple tap-to-pay services, ahead of Stripe in using a merchant’s iPhone without additional hardware to accept customer card payments.

In February, Apple announced an iteration of tap-to-pay for which merchants need only an iPhone and a partner-enabled app. It said Stripe would be the first company to offer such a service, but its app is still in beta testing, and the company is advertising a spring launch. Payments processors Shopify (powered by Stripe) and Square offer the service to select merchants. Meanwhile, any of Adyen’s US clients can immediately begin accepting tap-to-pay from an iPhone. Apparel makers Vince, G-Star, Scotch & Soda, and Nike are among the first wave of merchants adopting the new service. Adyen’s software is designed to integrate with merchants’ existing software, avoiding the need for additional downloads.

While tap-to-pay has the potential to revolutionize the payment experience and potentially erode the market for POS terminals, in the long run, the ubiquity of POS terminals, especially the QR-based ones in emerging markets, will remain. Unless Google were to offer a similar feature on its Android platform as most smartphones in those markets are Android-based.


[i] https://finance.yahoo.com/news/global-point-sale-pos-terminal-082800354.html

 

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