The mobile point of sale (mPOS) system is a relative newcomer to the point-of-sale industry. Initially targeted to micro-merchants that typically process less than $25,000 in payment card transactions, mPOS systems were designed to allow customers to pay through card readers attached to a mobile device connected to a payment network.
Simple and inexpensive, mPOS offerings like Square quickly gained traction among smaller sized businesses, offering the basic functionality of a fixed POS solution in a flexible, scalable form.
In recent years, the mPOS market has expanded to include all sizes and types of businesses. mPOS has evolved beyond simple credit card acceptance into a business management and customer convenience tool. A report by GrowthPraxis revealed that the mPOS market is growing in the U.S. at a rate of 9.2%, while conventional POS sales are shrinking at a rate of -2.5%. By 2018, the installed base for mPOS is forecasted to be larger than the installed base of POS terminals worldwide.
Aside from continued merchant adoption across various merchant sizes and types, what else is trending in mPOS in 2016? Let’s take a look.
The Benefits of Cloud Services
While traditional POS systems store data on local servers and run on a closed internal network, most mPOS systems are cloud-based, with data stored remotely and available online. Cloud services have become more secure with the use of point-to-point encryption and tokenization, tools that protect cardholder data both in transit and at rest.
Secure cloud services give merchants greater flexibility in accessing their data remotely, allowing them to view reports and manage business functions from anywhere with internet access.
The main factor driving increased reliance on cloud services for mPOS is that small business merchants are becoming more comfortable with cloud services storing their data. In return, however, they expect more functionality. In addition to cutting the costs of payment acceptance, mPOS solutions are now expected to help merchants drive business management efficiency across multiple locations—and the cloud makes this possible.
Those expectations include things like inventory tracking, customer sales information and employee scheduling. In order to meet demand, compete with traditional POS sales, and stay relevant in the marketplace, value-added resellers (VARs) and independent service vendors (ISVs) offering mPOS solutions need to incorporate cloud services into their offerings. Early mPOS apps couldn’t do this, but the cloud makes these services more readily available.
Hardware Reliability Taking Center Stage
When mPOS first emerged, it was built to interface with mass market consumer devices (e.g. smartphones), not business-centric hardware. But such mass market devices are usually not durable enough to withstand the spills and drops on the sales floor, leaving many merchants feeling frustrated when the devices break or the software malfunctions. Because of this, many merchants are choosing to migrate from their personal mass market-focused hardware to more purpose-built solutions.
Hardware technology is catching up with mPOS in the form of more rugged mPOS options, and merchants are beginning to see the value of purchasing these devices upfront. For many, the cost of replacing a tablet meant for personal use outweighs the cost of investing in a more durable mobile solution specifically designed for payments.
In addition to durability, small business owners want to be able to accept payments using smartchip-based transactions via EMV, or wireless transactions using near field communication (NFC).
Most of today’s attached devices don’t readily accept NFC data, while EMV transactions may require PIN pads or detached card readers to process mobile payments. Additionally, EMV transactions require two-way communication, as opposed to one-way with a magnetic stripe, which makes finding the right purpose-built card reader even more important. This also places an emphasis on security, with merchants willing to pay for more secure mPOS hardware that protects their cash flow.
In addition to integrated security, merchants are seeking reliable mPOS solutions with better wireless and scanning performance, features for enhanced manageability and productivity, longer battery life and other features that are typically associated with traditional POS systems. And while most owners want features that will work for them, they expect to have solutions that are easy to learn and scale when needed.
The features that attracted merchants to mPOS solutions in the first place—affordability, mobility and simplicity—remain just as important today as they were when the technology first hit the market. But these features alone aren’t enough to increase adoption among traditional POS markets.
With the demand for cloud services, hardware reliability, and EMV and NFC capability, as well as the migration to mPOS by larger enterprises, one thing’s for certain: the exciting possibilities that mPOS has to offer are there for the taking. For more insight into choosing the right POS system for your business, see our ultimate guide to choosing a point-of-sale system.