While COVID-19 resulted in accelerated digital payments adoption, it also brought to attention the inherent pain points that have always stood in the way of wider acceptance.
Ever since credit cards came to be, digital payments acceptance has relied on merchants investing in Point of Sale (POS) terminals to accept payments – inadvertently creating a barrier for cash-strapped micro, small and medium enterprises.
And as more consumers continue to favour contactless transactions, a trend unlikely to reverse post-pandemic, small businesses are now left with no choice but to make the shift to digital. Which is why, innovations like SoftPOS could be a game-changer.
SoftPOS refers to a software-only mobile application that enables merchants to use smartphones as POS terminals to accept payments from contactless cards or NFC wallets (like ApplePay, Android Pay, SamsungPay).
For a small business to afford a POS machine upfront at about $500, or for an acquirer to offer the machine to a merchant knowing that the volumes or number of transactions will take too long to break even, deters the shift to digital payments.
In a SoftPos model, or in our case Network International’s N-Genius App, NFC (Near-Field Communication) technology is used to convert an Android smartphone into a mobile contactless payment device, without the need for additional hardware.
N-Genius App, for example, works on a promotional per month membership fee of AED 20 with no lock-in period, and with pay as you go on the regular cost of acceptance that ranges between 1-2.5 per cent (depending on sector), offering unserved and underserved merchants a much better alternative to the traditional model.
According to a 2021 study by Juniper Research, the global number of smartphones being used for SoftPOS payments will increase from 3.2 million in 2021 to almost 24 million in 2026.
From small retailers to grocers, pop-up stalls, catering suppliers, food truck owners, home services, bottled drinking water suppliers, laundry services and so on, SoftPOS has the potential to benefit merchants across all sectors that still deal in cash.
In addition to the operational cost savings, it empowers merchants to offer enhanced customer experiences and expand their business footprints more easily and quickly.
For example, a laundry shop can enable their delivery staff to use their Android devices to collect payments digitally on delivery. Such a solution would also eliminate the age-old inconvenience of “no change available”, while also reducing the hassle of dealing with cash across multiple points of sale thereby increasing comfort and security for businesses.
However, while SoftPOS is small business -friendly, it also offers a wealth of opportunities for large merchants too particularly distribution and delivery giants to grow their reach with smaller investment in equipment. It can improve shopper experiences by doing away with checkout queues and enabling payments anywhere in-store, as well as grow curbside sales that have become increasingly popular since the virus outbreak.
POS or cash won’t be displaced – yet
That said, this cheaper route into digital payments acceptance is unlikely to completely replace POS machines or cash – yet.
As SoftPOS gains traction in the market, meeting the needs of both merchants and customers alike, it is more likely to complement the other methods for now.
What it will do, however, is help further the democratization of payments and reduce the cost of acceptance to support the UAE government’s digitalization efforts and ambitions, as well as in other emerging economies in the wider Middle East region.
Although ‘the end of cash’ is still a faraway prospect purely for reasons of habit or culture, the high penetration of smartphones in our region also makes SoftPOS a strong enabler of financial inclusion as it meets the current and future needs of consumers.
Under the circumstances created by COVID-19, acceptance of digital payments has become speedy and favourable. If priced properly and with the right levels of awareness created, SoftPOS will bring the next big leap in digital payment acceptance for businesses.