How SoftPOS technology could transform the retail industry
By Hervé Thevenin, Global Marketing Manager Vertical Sales at Worldline.
It’s expected that the total number of merchants deploying Software Point Of Sales (SoftPOS) solutions will surpass 34.5 million globally in the next five years with growth driven by Apple’s entrance into the space, enabling more users to access an affordable mobile POS solution.
In this article, I offer my considered view as to how this trend will continue to make its mark on the retail industry.
What is SoftPOS?
In short, a SoftPOS solution allows any NFC enabled smartphone or tablet to be converted into a certified payment terminal. To add, no extra hardware is required, only a software programme. The technology can either apply to a Commercial Off-The-Shelf (COTS) device or to “enterprise devices”. These are Android OS devices some companies develop specifically for the purpose of their business clients, and where, later, further features, such as Zebra Technologies, Toshiba, Diebold Nixdorf, amongst many others may be added.
Other tech giants have taken steps towards SoftPOS. As I mentioned in the introduction, Apple announced the introduction of a solution capable of transforming an IOS device into a payment terminal in February 2022, a solution available to merchants of all sizes in the US. Similarly, Visa & Mastercard have already built their own certification / authorisation solution, which is available in Europe.
The implementation of a SoftPOS solution on a smart device will make it compliant with all relevant PCI standards required for payment processing. These include the PCI Contactless Payments on COTS (CPoC) Standard, which was adopted in 2019 and which prevents a device from paying beyond the contactless limit (with the exception of dedicated certification programmes such as Visa and/or Mastercard) that can be used in conjunction.
More recently, in November 2022, PCI introduced its latest standard – Mobile Payments on COTS (MPoC) which integrates the latest requirements for developing SoftPOS technology allowing merchants to accept contactless payments on COTS devices, with PIN (Personal Identification Number) and PAN (Primary Account Number) on glass for amounts above the contactless limit.
Benefits for customers
SoftPOS is arguably the type of technological innovation that answers the changing needs and requirements of customers. There are many sectors that will benefit from it, but arguably the retail industry (both grocery and specialty) can be seen as the ideal industry for which SoftPOS technology has many use-cases and benefits: endless-aisles, assisted sales, pop-up stores, queue-busting, payments on delivery, etc.
For instance, customers are using their phone on a daily basis to select and purchase goods and service online, while SoftPOS will facilitate an equally simple and seamless payments journey while in store. Indeed, customers will be able to pay for their goods simply and directly from the sales staff equipped with a SoftPOS payment terminal, helping them to avoid queues That’s the so-called “queue-busting” use case.
Secure and reliable payment method
There are many other use cases where this technology simplifies the payment/checkout process, for the benefit of the user who doesn’t have to wait and pay immediately after the purchase, in a seamless and easy way. After all, there has been a massive boost in the number of contactless payments over the past few years, making it a standard secure and reliable payment method.
Also, SoftPOS provides the opportunity to boost business opportunities: endless aisles and assisted sales. Specifically, by providing the possibility to pay directly where the product is located in the shop – or should be, i.e. endless aisles.
Thanks to the strong customer authentication (SCA) EU directive, multi-factor authentication is required when it comes to electronic payments. A smart mobile provides this security, whether it be via biometrics and/or an authentication code. Also, when a customer is using their mobile, the card details are not transmitted but instead transformed via tokenisation. As a result, I truly believe that the security is at least equivalent, if not superior to standard terminals.
Beyond its simplicity, another factor which makes SoftPOS appealing is the fact that merchants are constantly looking for new tools to improve their customer journey whilst cutting down on costs. We strongly believe SoftPOS will do just that.
The technology remains in its early stages and as such, the ideal business strategy for merchants entails a combination of SoftPOS with traditional payment terminals. At least at this stage, whilst the technology will benefit from further developments in the next few years. As such, it’s hard to predict what will happen in the long run. Looking at the trend, as of today, there seems to be little that could prevent SoftPOS from overtaking traditional payment methods at some point. The key question remains, when will this occur?
Having said that, we can see early adoption from many merchants already. I have been discussing with large merchants at some main industry events, such as the Paris Retail Week, and my feeling is that they are extremely interested in this technology, and in having it work alongside traditional payment terminals.
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