Growth in mPOS to propel payment industry: Study

NEW DELHI: The increased uptake of mobile point-of-sale (mPOS) in India will pave way for the influx of payments industry across verticals, thus benefitting new forms of payment from the evolving technology, according to a study.

These findings were highlighted in a combined study carried out by Mahindra Comviva, provider of mobility and mobile financial solutions, in association with the Aite Group, an independent research and advisory firm.

The study indicates that cards will account for 273 billion transactions at a combined value of some $30 trillion by 2018.  However, new forms of payment are expected to flourish as mPOS grows, including NFC-enabled mobile devices. The report draws attention to the next generation of mobile- based payment services benefiting from mPOS.

The Aite Group research indicates that from 2015 to 2018, contactless mobile transactions have the potential to reach 4% to 5% of retail payments with growth in transaction volume accelerating after 2020.

The study discusses the development of mobile point-of-sale (mPOS) acceptance methods, from their origins, as electronic payment services for small merchants to a channel used by larger enterprises to extend and enhance their customer service.

With the evolution of mPOS capabilities, hardware sales have also shown significant growth.  Discussions with leading point-of-sale (POS) vendors indicate that the total sales of mPOS hardware in 2014 amounted to around 10 million devices.

Srinivas Nidugondi, Senior VP and Head of Mobile Financial Solutions at Mahindra Comviva, said, “In a fast-evolving digital economy, mobility is a critical business enabler. mPOS helps merchants to modernize their business by offering speed of deployment and flexibility to deliver tailored solutions that can transform their relationship with their end customers.”

Andrew Copeman, a Payments Analyst at Aite Group, said, “The world of payments is at the start of a process of change more fundamental than ever before. New business models and partnerships with more flexible solutions having payment acceptance at their heart are the order of the day, but the key ingredient that weaves through the rapidly evolving landscape is mobility; the ability to accept payments at the customer’s convenience and at a greater variety of locations than ever before. mPOS is moving from a niche service into the mainstream of modern commerce.”

As mPOS moves beyond the small-business environment, application software is becoming the centerpiece of new POS systems increasingly tailored to be used across industries. Systems can be customized by means of associated software applications designed and downloaded to specific market segments and geographies. The era of one-size-fits-all POS systems is disappearing.

Mobility brings many new opportunities to enhance customer engagement and has been grasped not only by traditional players, but also by large enterprises, across industries, including healthcare providers, insurance companies, home delivery firms, couriers, and businesses in the transport and leisure sectors etc.

Alongside the evolution of mPOS hardware, payments acceptance is changing from the traditional card-based environment to cloud-based services. This move is stimulated by the wave of investments in mobile-device-based payment developments, using NFC contactless technologies, as well as the emergence of host card emulation and tokenization technologies. Next-generation POS services will be increasingly cloud-enabled, easing the transition from card-initiated to smartphone-initiated payments.