There’s no doubt that mobile point-of-sale (mPOS) hardware and software has been disruptive to the payments industry. It’s not uncommon to see cashiers swipe cards through a credit-card reader attached to an iPad or a smartphone at a coffee shop.
But after analysing survey data and talking to small businesses in New York City, we think that mPOS solutions from companies like Square and ShopKeep are not yet as common as reports suggest.
In a new report from BI Intelligence, we cut through the mPOS hype, exploring why adoption statistics are inflated, why some retailers are reverting back to legacy solutions, and why, in the end, mPOS will proliferate in face of the hurdles it’s currently facing.
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 field research suggesting that many of these merchants revert to sturdier legacy solutions.
- Many merchants who had mobile card readers didn’t actually use them. While inexpensive, solutions that use consumer-oriented smartphones and tablets (i.e., Apple and Android devices) end up leaving some merchants frustrated because these devices are not rugged or designed for heavy use in retail environments and because the software is often “buggy.”
- Purpose-built mPOS hardware will drive industry consolidation. If the purpose-built mPOS devices that are coming on to the market catch on, they would displace many of the products that pair with consumer smartphones and tablets. Meanwhile, mPOS providers will move from acquiring merchants with hardware, to providing mPOS software to mobile terminal providers or legacy acquirers.
In full, the report:
- Forecasts mPOS adoption among US retailers from 2014 through 2019.
- Estimates addressable processing revenue for mPOS providers targeting small merchants.
- Analyses why mPOS has caught on with small retailers and why some of these retailers are reverting back to legacy systems.