The Evolution of Fast, Frictionless Payment Experiences: A Game-Changer for Consumers, Merchants, and Payment Infrastructure
The winds of change are blowing strongly towards Software POS (SoftPOS), otherwise known as tap-on-mobile or tap-on-phone payments. With adoption on the fast track across North America, SoftPOS seems set to revolutionize the way we transact. The rise in popularity of SoftPOS, also known as Tap to Pay, can be traced back to 2020, a pivotal year for contactless payments, largely driven by the pandemic's push for touchless interactions.
The U.S. Federal Reserve's report provides compelling evidence: In 2018, 700 million contactless card payments amounted to $20 billion. This surged to 1.6 billion transactions, totaling $50 billion in 2019. The real game-changer, however, was 2020 when contactless card payments spiked by 172.3 percent to 3.7 billion, equating to $110 billion. This staggering growth was partially fueled by consumers' desire to avoid shared touchpoints amidst the pandemic.
Furthermore, a significant rise in the issuance of contactless cards by banks and a 29 percent YoY growth in mobile wallet use in 2020 have empowered more consumers to embrace this convenient form of payment. In fact, a 2021 NGPF survey revealed a significant milestone: over half of Americans were using contactless payments. Experts predict this trend to maintain an upward trajectory, spurred on by industry collaborations and regulatory conditions favoring its adoption.
Democratizing Contactless Payments: How SoftPOS Empowers Small and Micro Merchants
As consumer preferences pivot towards contactless, the challenge lies in equipping all merchants, including small and micro-merchants, with this payment capability without specific hardware. This is where Tap to Pay shines. It allows merchants to process card payments using a smartphone or tablet by simply downloading an app compliant with the Payment Card Industry’s Mobile Payments on Commercial off-the-shelf (MPoC) security standard. Following a speedy approval process, consumers can "tap" their mobile wallets or contactless cards over the merchant's near-field communication (NFC)-enabled device to pay.
Why SoftPOS Makes Sense: Benefits for All
SoftPOS presents a unique proposition, offering significant advantages to everyone involved in the payment process. Large retailers can streamline operations by accepting contactless payments anywhere, augmenting existing countertop terminals to bring transactions closer to the consumer. They can also leverage smartphones or other compatible devices for payment processing in aisles, pop-up shops, or when facilitating additional purchases for online pick-up customers.
Moreover, small merchants can utilize their NFC-enabled smartphones or devices to accept payments anywhere – whether at the counter, community events, or farmers' markets. Tap to Pay also provides an easy pay-at-table solution for restaurants and reduces queues during peak hours. It serves as a handy fail-over solution for any business accepting digital payments, a secure method for cash-carrying employees like rideshare drivers and an efficient tool for businesses using multiple MIDs. The added advantage is that as long as devices comply with Tap to Pay specifications, they remain usable even when standards or regulations change.
Acquirers and solutions providers can also expect exponential growth with the uptake of SoftPOS, forecasting a surge in micro-merchants accepting digital payments and a corresponding increase in payment processing revenues. Importantly, SoftPOS simplifies operations and lowers costs by eliminating the need for device provisioning, delivery and management. As there's no device to configure or ship, new clients can begin accepting payments without delay, reducing the chance of them considering alternative providers.
The Ultimate Winner - The Consumer
The wave of SoftPOS adoption is good news for consumers as well. It expands payment options wherever they shop or dine. Also, as more businesses break free from the financial and operational constraints of accepting contactless payments via traditional payment terminals, consumers will enjoy the flexibility to use their contactless cards or mobile wallets more broadly - at the nail salon, coffee shop, rental office, or even with the utility company.
The Future of SoftPOS - Are You Ready?
Juniper Research anticipates a stunning 475 percent growth in SoftPOS usage by 2027, with more than 34.5 million merchants onboard, a significant leap from the 6 million in 2022. This surge is driven by current payment trends, benefits to payments stakeholders, and significant industry developments, including Apple's entrance into the market.
Payments will continue to evolve and Tap to Pay will play a meaningful role in this. Now is the time to embrace Tap to Pay as part of your future business strategy.
Ready to tap into the Future? Contact us today to discover how Tap to Pay can help to transform your business!
