The POS terminals market has observed strong growth over the past decade, driven by notable advancements in payment technologies. Right from ease-of-use to mounting commonness of the point of sale (POS) technology, several factors have caused an upsurge in adoption of these systems across varied industries. Moreover, the broadening scope of application of the product, especially in developing regions, has created massive potential for the digital payment wave in remote areas and newer markets.
Recently, governments across the globe have been focusing on establishing a robust cashless economy on account of its numerous benefits. Cashless payments help maintain a detailed record of transactions, enhance the ease of conducting business, and prevent cash-related crimes. They help curb black money, improve user experience in shopping and online transactions, and allow for more transparency in transactions and business operations, thereby reducing incidences of tax evasion and money laundering.
Even with all these advantages, digital payments are not without faults. Some key challenges that are hindering the adoption of these systems, particularly in developing and underdeveloped regions, include cyber fraud and lack of digital literacy, among others. However, studies have indicated that introducing a cashless payment system with proper policy measures, such as setting up POS terminals, safeguarding against cyber frauds, and conducting digital literacy campaigns, could support the development of a cashless economy in these regions.
Due to the prevalent adoption of digital payment technologies, the POS terminals market size is estimated to be worth over USD 160 billion by 2028. Some notable trends that are likely to impact this growth are discussed hereunder.
Modern-day trade sees massive payments made rapidly over long distances with minimal transaction costs, which has chiefly prompted the digitization of payment systems worldwide. Digital payments address several issues pertinent to the use of cash, such as traceability, and are time-saving as well as convenient.
Governments globally have adopted drastic measures and policies to clear markets of black money. Since the black economy is hugely enabled by cash use, experts consider phasing it out altogether to be a potential solution, specifically in regions where the problem is present at an enormous scale. A cashless economy lowers the cost of banking services, improves monetary policy by regulating inflation, and strengthens a country’s economic growth, which has made cashless transactions highly popular in nations that depict moderate economic progress.
One such example is India, which has implemented various strategies, including demonetization, to tackle the black money issue. In its efforts to promote a digital economy, the region saw a rise in the number of POS terminals installments by around 40 lakhs over five years by 2019. Thus, rising emphasis on building a cashless or cash-lite economy is expected to fuel the utilization of digital payment methods like POS technology in the future.
2. E-commerce boom driving the expansion of retail POS terminals industry
The COVID-19 pandemic brought about major changes in essentially all industries, vastly expediting digital adoption. In addition, there was an increase in consumer inclination towards online stores on account of mobility restrictions as well as a shift in consumer behavior towards cashless payments in view of prominent health and safety concerns.
Furthermore, besides increased consumer preference for online and e-commerce avenues, an upsurge has also been witnessed in consumer demand for in-store digital payments to enable secure contactless payments during the pandemic. As a result, soaring uptake of digital payments among consumers, along with high adoption of POS terminals & software by sellers, is foreseen to generate massive growth potential for retail POS terminals market in the forthcoming years.
3. Notable technological advancements in POS systems
Manufacturers have been investing in the enhancement of existing products by incorporating novel technologies viz., NFC (near field communication), MST (magnetic secure transmission), and biometrics, among others into POS systems to address diverse consumer needs for safe and efficient transactions. Another key development in the industry is the shift towards software-only POS systems since they don’t require sellers to invest in hardware, which has been propelling the point-of-sale software market share.
To cite an instance, in February 2022, tech giant Apple introduced Tap to Pay on its iPhone, empowering merchants across the U.S. to securely accept payment with contactless debit & credit cards, Apple Pay, and other e-wallets through a tap to their iPhone. Tap to Pay leverages NFC technology and does not require any additional hardware. Owing to such advancements, the mPOS terminals market share has also been growing substantially. Notably, the mobile POS terminals market is projected to cross USD 70 billion by 2027.
Another example is semiconductor specialist Samsung Electronics’ first all-in-one biometric payment card. In January 2022, the company introduced its novel security IC (integrated circuit) that can read biometric data using a fingerprint sensor. Biometric authentication eliminates the need to type a PIN and prevents fraudulent transactions while facilitating safer and faster transactions. Technological integration to create newer, effective, and more secure POS systems would propel product adoption in the years ahead.
4. Industry leaders’ focus on product development to drive POS terminal market share
Leading companies have been implementing various to establishing their place in the sector. One of the industry leaders in the POS terminals space is Square, Inc., (under Block, Inc.). The company developed its mobile payments and POS services with the objective of transforming the checkout process and accelerate mobile & digital commerce by removing long lines and antiquated cash from sales.
In April 2022, Square presented the next-gen Square Stand, its iconic countertop device that can turn an iPad into a robust and potent POS system that sellers can utilize to run their operations. Square Stand blends the firm’s POS hardware and software to enable sellers to take payments in-person, manage ecommerce deliveries & sales, buy online, and pick up in-store orders from one place. Such advancements in technology are a key factor slated to positively influence the industry landscape.
Other companies operating in the POS terminals market are Castles Technology, Co. Ltd, Fujian Newland Payment Technology Co., Ltd., Bematech SA, AURES Group, Panasonic Corporation, Diebold Nixdorf, NCR Corporation, NEC Corporation, PAR Technology Corporation, Toshiba Corporation, PAX Technology, New POS Technology Limited, Samsung Electronics, Co., Ltd., Posiflex Technology, Touch Dynamic Inc., and so on.
After the onset of COVID-19, due to health safety and hygiene reasons, contactless technology saw an upsurge in application across diverse sectors. Positive experiences with the use of contactless payments have heavily stimulated POS terminals penetration during the pandemic. Subsequently, increased consumer familiarity and preference for contactless payments is likely to pave the way for POS terminals market growth across the globe in the forthcoming years.