Mobile Is Revolutionizing The Way Merchants Accept Payments and Manage Their Businesses
By John Heggestuen
January 12, 2015
The mobile point-of-sale (mPOS) first shook the payments industry with Square's simple mobile card reader, which attached to smartphones and tablets. It gave small and micro merchants a simple and inexpensive way to accept and track credit and debit card payments.
Since then, the industry has exploded with mPOS solutions, but they don't all live up to the hype and many of the businesses that provide them have struggled to figure out how to effectively monetize the merchants they acquire.
In a new report from BI Intelligence, we cut through the mPOS hype by analyzing the needs of the retailers that have adopted the technology, and interviewing merchants to find what works and what doesn't.
Here are some of the key takeaways:
- mPOS is a blanket term for a variety of hardware and software. On the hardware side mPOS devices often pair with a smartphone or tablet, though stand-alone smart registers like Poynt are becoming more prevalent. mPOS software is usually fully or partially cloud-based and runs on mobile operating systems.
- mPOS is disruptive, but retail adoption is lower than surveys suggest. Multiple surveys have mPOS adoption at over 40% in the US among small to medium-sized businesses, but we estimate adoption is lower for retail merchants. This finding is based on a detailed look at the data and conversations that we've had suggesting that many of these merchants revert to sturdier legacy solutions.
- Companies that got into the mPOS industry early originally drove revenue by transaction processing, but because mPOS devices primarily attract low-volume merchants, acquiring enough merchants to support a business has been an ongoing challenge.
- The business model is shifting from processing to software-based value-added services. What mPOS providers are realizing is that upselling to existing merchants is a better strategy than solely focusing on acquiring more merchants for pure-play processing. When small businesses are ready to start accepting cards they're often looking for other business solutions like marketing and payroll management as well.
- Purpose-built mPOS hardware will drive industry consolidation. If the purpose-built mPOS hardware that is coming on to the market catches on, it would displace many of the products that pair with consumer smartphones and tablets. mPOS providers will move from acquiring merchants with hardware, to providing mPOS software to mobile terminal providers or legacy acquirers.