The technology is building momentum as merchants of all sizes displace POS terminals with commercial off-the-shelf devices. There are some issues.

It wasn’t all that long ago that the idea of turning an ordinary smart phone into a point-of-sale terminal seemed like a pipe dream. But more than a decade after its introduction, software point of sale, or softPOS for short, is riding a growing wave of adoption.

Mobile and small merchants, such as in-home fitness trainers and home-services providers, are embracing the technology, as might be expected. But so are large sellers. They see the technology as a way to bring the point of sale to the point of interaction with the customer within the store.

Retailers, for example, are turning to softPOS as a line buster, while restaurants are adopting the technology to enable payment at the table. Other merchants adopting the technology include food-truck operators, sellers at festivals or farmer’s markets, pop-up stores, and taxi drivers.

SoftPOS is an application that allows contactless payment cards or digital wallets to be tapped or waved on or at a smart phone to pay for a purchase.

Once merchants are introduced to the technology, they quickly embrace it, payments experts say. The number of merchants using softPOS is expected to explode in the coming years to more than 34.5 million worldwide by 2027, up from 6 million in 2022, according to a report released last year by Juniper Research.

Increased merchant adoption of the technology is also expected propel contactless payments volume to $10 trillion annually in 2027, up from $4.6 trillion in 2022, Juniper says.

“Where merchants that deployed softPOS were seeing two to three transactions a day a few years ago, they are now seeing 20 or more a day,” says Sam Shawki, chief executive for MagicCube Inc., which partnered with ACI Worldwide Inc. in April to make its iAccept softPOS platform available to small and mid-size merchants. That move came less than a year after MagicCube offered ts platform to big-box merchants.

“We are also seeing softPOS alongside traditional POS terminals among merchants in Europe,” Shawki adds.

‘The Global Standard’

A key reason merchants are supplementing their traditional POS terminals with softPOS devices is that the technology is a low-cost alternative to adding more POS devices in a store or chain. Merchants need only download the softPOS app onto a smart phone or tablet to convert the device into a POS terminal. No additional hardware, such as a dongle, is required.

SoftPOS applications are typically bank and acquirer agnostic, and, in the case of a device running the Android operating system, device agnostic. SoftPOS apps developed for iPhones or Apple Inc. tablets are specific to those devices.

“SoftPOS eliminates the need for additional hardware to accept card-based payments, so it’s simple and inexpensive for merchants to implement. In most cases, it’s as easy as downloading an app and then registering with the payment provider,” says Thad Peterson, a strategic advisor for the financial-services research firm Datos Insights.

Now, “with contactless cards becoming the global standard, there are no barriers to the growth of SoftPOS usage,” Peterson adds.

While installing softPOS can be as easy as downloading an app, the installation path for large merchants can involve more steps, depending on their technology stack and intended use cases, says Pratap Gautam, head of GBS (global business services) product strategy for the big processor Fiserv Inc.

To make it easier for large merchants to install softPOS, Fiserv’s Carat point-of-sale platform offers a software developer kit that allows the merchant to integrate capabilities within their own point-of-sale applications, for example.

Leveraging an existing smart phone or tablet as a POS terminal can be an obvious cost benefit to merchants, particularly those that deploy multiple lanes or points of sale in each store. But small merchants can save significant hardware sums, as well, observers say, particularly as the business grows.

“Adding a new payment device that can accept payments without requiring the purchase of additional POS hardware can be compelling for small merchants that may not … have the means to invest in additional tech,” Gautam says.

New Markets

But large merchants are picking up on the benefits, as well, and not just big-box stores. In November, Alaska Airlines began rolling out softPOS for in-flight purchases of food and beverages. The air carrier is using Tap to Pay for iPhone through Stripe Inc.’s Terminal app, which it is adding to its company-issued iPhones to accept contactless
payments. More than 7,000 Alaska Airlines flight attendants currently use the devices to monitor seat assignments, offer upgrades, and track dietary preferences.

The airline says it sees the adoption of Tap to Pay on iPhone as creating a more seamless payments workflow that requires no new devices. It’s also easy for employees to set up and operate, the carrier says. Alaska Airlines will initially roll out Tap to Pay on iPhone on select flights and plans to expand the technology across its entire fleet in the coming months.

Apple Inc.’s launch of Tap to Pay on iPhone last year significantly expanded the market or softPOS. But it also opened up new markets for payments providers like Stripe, Block Inc.’s Square point-of-sale unit, and Adyen, all of which quickly signed on to offer Tap to Pay for iPhone.

Prior to Apple’s entry in the softPOS arena, the technology was only available on Android-based devices. Stripe added softPOS for Android in February, and Square added Tap to Pay for Android to its tech stack in April.

“The flexibility and ease-of-use of Tap to Pay solutions make them an appealing technology for businesses of all sizes,” a Square spokesperson says, “We’ve seen sellers of all types benefit from Square’s Tap to Pay offerings.”

Square says its sellers that have storefronts and existing Square hardware are using the technology to customize in-store commerce for customers. The technology, Square says, showcases that tap-to-pay solutions can function as both a standalone payment-acceptance method and as an additive tool for existing commerce setups.

“We’ve seen strong adoption of our Tap to Pay technology domestically and abroad, including among new-to-Square sellers who gravitate towards it as their first payment-acceptance method when signing up for Square,” the spokesperson says.


While Apple’s entry into softPOS expanded the market for the technology by enabling it to be installed on more commercial off-the-shelf (COTS) devices, MagicCube’s Shawki sees Android devices as a larger market for the software. “[Our platform can] run on a wide variety of devices such as TV monitors, whereas Apple limits software development to its devices,” he says.

One point of differentiation between softPOS on Apple and Android devices, Shawki says, is that Apple ties security for the primary account number (PAN) to the secure element in its devices, while MagicCube embeds security for the PAN within its platform. That approach opens the door for merchants to access a wider range of Android devices as softPOS terminals. “Our [secure element] is a virtual chip that can be loaded onto any device, which makes our software device-
independent,” Shawki says.

That distinction aside, softPOS in general has drawbacks, including transaction latency and the lack of a printed receipt. “That could make the customer experience less convenient or more cumbersome than a transaction done on a traditional in-store POS terminal,” Peterson says.

One barrier to merchant adoption is that softPOS applications need to be MPoC-certified by the PCI Security Standards Council, the governing body for the payment card industry data-security standards. MPoC is a testing and approval program for payment technologies that use commercial off-the-shelf devices and an app to accept payments, rather than a dedicated POS terminal.

“There’s currently a backlog for certification and there are only a few labs authorized to certify solutions,” Peterson adds.

Another barrier is that it’s not always easy to persuade merchants to start using a new POS device, even if it happens to be one they habitually carry around. “Terminals are a sticky part of the payments-processing business, so it can be hard to get merchants to switch POS devices,” says Cliff Gray, a senior associate for the consultancy TSG, formerly The Strawhecker Group.

Also, while smart phones may be ubiquitous technology, when used as COTS devices they are not hardened to keep out hackers the way dedicated POS terminals are, Gray adds. One potential security risk is that other apps loaded on the device can create a backdoor for hackers to gain access to the device and the payment information that passes through it.

The risk of such occurrences is greater on Android devices than on Apple technology, observers say, since application development for Android apps is open-source, which means the code is readily available and may be redistributed and modified.

“App development for Android devices is kind of like the Wild West, whereas app development for Apple is more controlled,” says Gray.  “If you develop apps for an Apple device, you follow their rules.”

‘A Better Experience’

For COTS devices to truly become secure payment terminals, card data passing through the device should be tokenized, Gray argues.

“If the only card data that passes through the phone is tokenized, then the PAN is taken out of the ecosystem and it does not matter whether you are using the latest version of the phone or an older model [that may have weaker data security features],” Gray says. “Removing the PAN from the ecosystem removes the incentive for criminals to beat your defenses.” “PAN” refers to the payment account number.

Still, Gray remains confident the payments industry will overcome obstacles to COTS adoption over time.

“There are limitations to softPOS, but the draw to the technology is that merchants can bring the device to where the customer is, as opposed to making her go to the checkout counter, which makes for a better customer experience,” says Gray.

“The softPOS wave is a great wave to ride, but it can be tricky to stay atop it right now,” he adds. “A lot of obstacles still remain to adoption, but there are a lot of benefits, too, and the payments industry will eventually overcome the challenges the technology faces.”

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