Technology has always led to innovation. Who knew that the bulky and ornate “Incorruptible Cashier” of 1879 — inspired by the mechanism of a ship’s propeller — would evolve into the modern day POS system? The cash register as we know it has undergone massive leaps in evolution to become what it is today.
The traditional POS market is heading toward a transitional period. With the rise in mobile technologies, many industries (retail, restaurant, healthcare, hospitality and entertainment) which once propelled the demand for these legacy POS systems are now shifting to mPOS terminals given their cost effectiveness, mobility, and transactional ease. An mPOS terminal is nothing but an Internet-enabled smartphone or tablet equipped with point-of-sale apps.
The mPOS transaction market size is expected to grow from USD 1.8 billion in 2014 to USD 13.7 billion in 2019, at a compound annual rate of 50.5 percent. The traditional POS manufacturers, now at risk of losing market share to mPOS terminals, are being forced to adapt. According to ABI Research’s POS & mPOS Devices market data, even the leading POS manufacturers (including Ingenico, PAX Technology, and Verifone) are already gearing up to take advantage of next-generation opportunities in pay-at-the-table, in-store self-service, omni-channel enablement, and analytics.
Drivers of the Evolution of POS
Digital transactions are on a solid upward trend in most countries. It is primarily because of the traction generated by mobile payment and digital wallet services such as Apple Pay, Samsung Pay, Android Pay, TenPay and AliPay. With a new set of drivers we are likely to see even more rapid developments over the next ten years in the POS landscape.
Millennials: The tech-savvy digital natives are the primary drivers of change. They are the ones who who have made digital transactions a necessity instead of a convenience. In the coming years, the global middle class — comprised mostly of millennials — will dramatically boost spending and drive further changes in the POS industry.
Innovation: Some startups (Square, LevelUp, Shopkeep, Revel) along with innovative app developers are majorly disrupting the POS space by designing some of the most unique and personalized POS experiences. As cloud computing becomes more mainstream, developers will play an even more important role in integrating different POS capabilities and back end systems.
IoT: POS terminals will also integrate with sensors, cameras and video monitors to provide smart advertising to customers based on environment and purchasing trends. As merchants start leveraging the smartphone because of its embedded sensors, new use cases and functionalities in the POS industry will sprout up.
Emerging Markets will be at the Forefront of the Evolving POS industry
While the US is currently the largest market for mPOS in the world — both in terms of active devices and value of transactions — it may be displaced by emerging markets in the near future. A potent combination of an urban middle class, rising literacy levels and rapid urbanization is likely to result in a massive growth in emerging markets. Given that nearly 90% of millennials live in emerging economies (India, China, Brazil, the Philippines, Malaysia, Turkey and South Africa), it is a very realistic possibility.
The traditional POS terminals have not been able to achieve widespread penetration in emerging economies, partially due to high costs and partly due to lack of interoperability among networks. This is why SMEs in these countries are readily adopting mobile devices or mPOS solutions: because they open an affordable channel to receive payments. Also, the growing ecommerce and mcommerce spaces in emerging markets are acting as drivers of digital transactions and enabling the evolution of the POS systems.
Contactless Payments May Become the Norm
As more and more merchants adopt smartphones and tablets as POS terminals, they will also open up to the idea of making and receiving payments through their NFC-enabled mobile devices, which means consumers can pay by holding their smartphones up to a sensor.
In the near future, many POS terminals will be enabled to process payments using NFC, QR codes and BLE technologies. While contactless payments are on a strong upswing now, they are likely to become the norm very soon.
The Future is Here
Reduced mobility, huge upfront costs, delays in payment processing, less flexibility for customization, instances of theft, expensive upgrades: all of these issues are creating demand for mPOS systems. It is only a matter of time before the legacy countertop POS systems with 15 inch screens are entirely replaced by smartphones and tablets.
And with the rise of mobile and contactless payment methods, the payment industry which once survived on paper receipts may very well be on the brink of going paperless. About time, don’t you think?
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