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Currency has cashed in its chips – the future is in POS and NFC

The pandemic has signalled the end of cash in many markets, accelerating the trend of using to credit cards and utilize near-field communications (NFC) to pay for goods. This is particularly apparent at the point of sale (POS) where the ease and familiarity of tap-and-go modes of payment has replaced the handling of cash and the issuing of change – in 2020, global consumer preference to pay with cash fell dramatically to 15%. The move away from cash and increased trust in NFC for payments, has seen connected terminals for in-store remote payments become part of everyone’s daily lives and the global PoS terminal market, contributing even more to the growth of this market.

Widespread adoption of POS terminals

Digital payments are no longer the preserve of large retailers and businesses of all sizes from one-person operations to large corporations can utilise connected terminals such as SumUp or Square which can be bought off-the-shelf in electronics retailers with no hassle and great flexibility. This accessibility is accelerating adoption of cellular POS terminals, with the market set to grow four-fold from US$20bn in 2020 to US$80bn in 2026.

Many transactions involving small – or micro – merchants are made away from physical retail stores and are completed using cash rather than credit or debit cards. For many years traditional POS terminals had been rejected by micro-merchants because of their high cost, long term contractual commitments, restrictive user interfaces and the Payment Card Industry Data Security Standard compliance requirements. Even so, the move by the payments industry to adopt mobile POS (mPOS) technology, which use cellular connectivity, to either replace or complement traditional POS terminals is underway and opening up this substantial opportunity.

The combination of increased acceptance of non-cash payments and growing adoption of NFC payments has transformed the POS payments landscape. Research firm Berg Insight reports that the attach rate for NFC in the mPOS segment reached 69% in 2020 as NFC-ready mPOS terminal shipments reached 26.9 million units. It further predicts forecasts that global shipments of NFC-ready mPOS terminals will grow at a compound annual growth rate (CAGR) of 11.7% in the next five years to reach 46.7 million units by 2025. The growth is driven by the increase in mPOS terminal shipments from 39.2 million units in 2020 to 50.3 million units in 2025, the firm says.

POS use cases go beyond payments

POS isn’t only about payments, although this is the killer app for the expanded POS device market. AI-enabled POS systems provide maximum flexibility while also providing precise monitoring for inventory tracking and order management. AI POS systems can also be easily integrated to assist with reporting and connect to accounting systems. These systems are able to handle the complex scheduling tasks that were previously time-consuming and overwhelming and precluded smaller organizations from utilizing mPOS. AI-enabled POS systems are easy and fast to use so employees can be more productive.

POS devices are being revolutionised by adoption of mobile POS (mPOS), which typically relies on 4G/LTE with some 3G deployments due to be replaced in the future. In some markets, especially for low-end POS devices, demand is shifting to Cat 1 connectivity as lower cost POS solutions are needed. In India, for example, voice confirmation of transactions is growing in popularity so simple applications such as this are well-suited to Cat 1. In both China and India this smart voice announcement of successful payment is widely deployed at grocery stores and Quectel’s experience is that India is the fastest-growing market for the payments segment.

The convenience of no wires and being able to take payments outdoors makes the case for LTE as the connectivity of choice for this market because the bandwidth is sufficient and the technology is secure enough to support charging and payment activities. Cash certainly looks to be a thing of the past for most users.

You can read about POS and smart vending use cases in more detail in Quectel’s white paper ‘Which connectivity is the smart choice for POS and vending?’