How “SoftPoS” is remaking the way we pay

4 minute read
“Software point-of-sale” has a prosaic name, but transformative implications...


Since the pandemic, it has become second nature to rely on our phones for all kinds of new functions: To check in and out of venues, to carry proof of ID, and—most notably, of course—to pay. Near-Field Communication (NFC) technology has steadily transformed our smartphones into wallets that can be used in ever more places. A UK banking industry body1 found that contactless payments increased by 30 percent to 17 billion between 2021 and 2022. In contrast, cash payments fell to 14 percent of total payments compared to 54 percent in 2013. 

Now, mobile devices have a new trick: The ability to accept contactless payments. Dubbed SoftPoS (“software point-of-sale”), also known as tap-to-phone, this technology turns any NFC-enabled smartphone or tablet into a secure contactless payment terminal, able to accept payments2 with just a tap of a customer’s phone or card. No dongle required.

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The benefit to the merchant is simple: It eliminates the need to buy expensive point-of-sale hardware and allows the ability to operate wirelessly anywhere. Companies are already forging partnerships to trial the technology,3 and adoption is predicted to skyrocket. According to one forecast,4 contactless payments volume will rise from $195 billion to $408 billion globally between 2022 and 2027, as part of which SoftPOS adoption will grow from six million to 34.5 million merchants over the same period. 

Although the idea itself has existed for a short while, recent security standards have spurred an uplift in SoftPoS adoption. We are now beginning to see first-hand the possibilities it unlocks. Most obviously, it is making shopping experiences more seamless. Picture a customer browsing for shirts on a shop floor. A stylist can step in, help the customer to pick out something they want—or check for stock online—and close the sale on their phone or tablet right there among the rails. SoftPoS is therefore seen as an enabler for the emerging concept of “endless aisles”—the idea that customers should be able to access a retailer’s full online stock while in the physical aisle, buying in the shop, and having products shipped to their homes. 

The ability to transact quickly and securely on cell phones has implications well beyond retail. Transport companies can take payment on platforms and in transit. One Northern European rail operator,5 for instance, has already enabled train conductors to accept payment with their phones, with the goal of shrinking queues. Workers who are always on the move—from taxi drivers to window cleaners, plumbers to delivery drivers—also stand to benefit, as they can readily accept payments on their phones wherever they are. SoftPoS is particularly attractive for merchants in developing economies, where access to expensive payment terminals, and indeed hardwired connectivity, may be limited. 

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As SoftPoS contributes to broader momentum in the NFC-enabled payments space, it will help create an enabling context in which planned improvements in NFC technology may come to fruition. These are outlined in the industry’s current road map,6 and all SoftPoS users stand to benefit. Ambitions to extend the range of NFC, for example, mean that where a customer might currently have to hand over their device to pay a cab driver, they may eventually be able to pay from the backseat. More significant, perhaps, will be the arrival of mooted “multi-purpose taps”.7 These facilitate multiple actions in a single tap. In the very act of paying, reward points could to added to the consumer’s brand loyalty card or a digital receipt sent directly to their handset. 

Further down the line, SoftPoS has the potential to turn online shoppers’ personal devices into a card terminal. After finding something you want to buy on an e-commerce app, you could simply tap your physical card onto your own smartphone to pay. It would erase the hassle of inputting card details and remove the risk of storing a “card on file” with the merchant. 

Fundamentally, however, these innovations are driven by the need for physical commerce to compete with the virtues of the digital world. Customers are accustomed to the convenience of a simple click bringing them anything they desire. They want that experience in the real world, too. Businesses that provide it have an opportunity to gain an edge.