Pranjal Sharma, 11th Dec 2019
Gesture control has a magical quality about it. Much like royalty, things happen with a wave of your hand. In the feudal world, people scurried when a lord waved his hand as an order. In the world of technology, a wave of hand triggers bits of information zipping to complete a task. Popular use of such gesture-based activity has centred mostly around mobile phones, credit cards and hotel keys.
Phones can share information and even payment using near field communications (NFC) technology. Same with credit cards too. Hotel keys waved at a door is easier than putting the card in a slot. A new wave of technology is now ready to change the mobile based payment system once again. SoftPOS or software that replaces a point of sale (PoS) machine is graining traction across the world.
A typical PoS machine has chip-based connectivity that enables payments for consumers and merchants. The next wave has been led by SoftPos which is embedded in phones which enables them to connect and communicate with each other. For this the phones need to use NFC technology. Global communications and payment giants are now coming together to promote SoftPos since it reduces the need for physical machines for most transactions. There are two advantages that SoftPos has. A retailer doesn’t have to invest in a physical machine. Secondly, the retailer will not have to pay heavy fees to a third party POS provider.
A SoftPos service provider is expected to charge much less for similar service. A retailer can download the SoftPos on its own phone or tablet. Visa, Fiserv and Samsung have come together to promote SoftPos globally. It can convert smartphones and tablets into a contact payment terminal. SoftPos can be done using QR Codes, sound/ultrasound and NFC. In India, startup Zup.cash is taking SoftPos to a wide audience by eliminating the need for NFC.
“Our proprietary software doesn’t require NFC enabled phone for contactless payments,” says Founder Jaijit Bhattacharya. “Just 2 per cent of mobile phones are NFC enabled. So consumers and merchants can make contactless payments with any smartphone using our app.” The penetration of PoS machines is still very low in India. Less than 4 million of the 32 million registered merchants have a POS machine. Another 100 million merchants are not registered. Contactless phone-based payment system can bring millions of merchants into a formal system. “We have created a technology that allows even the cheapest of phones to be able to have contactless transfer of data without NFC,” says Bhattacharya. SoftPos like Zup also obviates the need for exchanging a phone number while making transactions.
The company is targeting 500,000 merchants over the next 18 months. Global contactless market is expected to rise from $8.75 billion in 2017 to $27.23 billion by 2023 according to Allied Market Research. SoftPos is emerging as an important driver of financial inclusion and digital payment. The government is encouraging the use of digital transaction but the high cost and fees of POS machines have been holding back rapid growth.
As SoftPos increases and its adoption picks up, merchants can ditch POS machines. The next 100 million merchants will have the options of using digital transaction using secure SoftPos options. The entry of companies like Samsung and Visa will further accelerate the use of SoftPos and financial inclusion.