Societal shifts have affected how retail customers shop. The move toward a 'cashless' society was accelerated during the COVID-19 pandemic, leading to more eCommerce transactions and online spending.
Meanwhile, in-store retail Point of Sale (POS) terminals transformed.
Traditional hardware-based POS systems evolved into specialized solutions, which provide compact mobile terminals. However, the arrival of software-based 'Soft POS' solutions will disrupt this market.
Soft POS Market Development
All POS systems process payment transactions by forming a connection between a buyer’s and a seller’s respective bank accounts for the transaction to occur, and actioning the exchange of funds.
According to the latest worldwide market study by Juniper Research, the global transaction value processed via Soft POS solutions will reach $11.8 billion by 2028, which is up from $1 billion in 2023.
New growth will be driven by Apple’s launch of 'Tap to Pay', coupled with the Soft POS's low cost of acceptance, which will likely lead to significant additional small business adoption.
Soft POS allows Near Field Communications (NFC) enabled smartphones or media tablets to accept contactless payments, without requiring additional hardware to process these transactions.
Juniper analysts anticipate that the number of smartphones using Soft POS by 2028 will reach 61 million globally -- growing 683 percent from 2023.
This incremental growth is largely due to Apple’s roll-out of its Tap to Pay solution in markets with high numbers of smaller retail merchants -- such as Brazil, France, and the UK.
Juniper has advised fintech payment companies to focus on bundling Soft POS solutions with other business tools, such as cash flow management, to maximize adoption success.
Alongside the adoption of Soft POS, Juniper has urged retail merchants to implement other POS software for unlocking centralized sales management, inventory, customer data, and more.
Market leaders in POS have an expansive list of technology partners, meaning services can be bundled with capabilities such as artificial intelligence (AI) data analytics.
"With the growing use of SDK integration, small businesses and merchants can access advanced software, such as loyalty & reward schemes and inventory management," said Daniel Bedford, research analyst at Juniper Research.
Outlook for Soft POS Applications Growth
Juniper's analyst believes that POS software bundles reduce the financial barriers to accessing POS technology -- thereby helping retailer businesses to readily scale their in-store operations.
That said, I anticipate Soft POS will offer a viable alternative, where retail merchants typically acquire POS terminals and pay for access to the POS software that enables them to process payments.
For Soft POS applications, merchants simply download the software, which once installed can convert an available mobile device into a fully functioning POS terminal.
The most common devices include smartphones and media tablets. Soft POS was originally only compatible with Android OS mobile devices. Once again, Google Android has led global market innovation.