David Noel-Lardin, VP for Digital Payment at Gemalto

A new study suggests that the adoption of mobile Point-of-Sale devices (mPOS), connecting wirelessly or via mobile devices, will increase annual mPOS transactions to over 87 billion by 2023.

This projected figure represents a threefold increase on the estimated 28 billion transactions in 2018, as the increased digitization of payments and widespread demonetization help drive annual growth at a notable rate.

Indeed, by 2023 it's expected that mPOS devices will account for almost one in four point-of-sale (POS) transactions.

mPOS prices set to fall

The report, published by Juniper Research, also found that mPOS devices will lead to an increased usage of payment cards in emerging markets. India is a case in point. The average growth in the number of mPOS devices in the country is forecast to be the fastest of any global region, weighing in it a hefty 46% annually over the next five years.

Inevitably, as usage increases, the average price of an mPOS device is expected to drop significantly over the next five years. The study found that the average price of an mPOS device will be $33 by 2023, a fall from $40 in 2018. Increased affordability will lead to the widespread adoption of mPOS devices by smaller businesses that were previously cash-driven.

mPOS will spur Africa’s move to cashless payments

When one looks at Africa particularly, it is clear that the continent is still in the throes of transitioning from cash to digital payments. In 2016, a MasterCard study showed that 52 percent of all transactions in South Africa were still cash-based, which in turn means heavy additional costs for both parties.

In similar vein, most Sub-Saharan countries remain underbanked, with a banking penetration rate well below 50 percent.

A key barrier to moving to cashless, digital transacting is the relative paucity of point-of-sale terminals. The average across the Sub-Saharan region is fewer than one terminal per 1 000 people, as compared to 23 per 1 000 in the United States.

However, Africa is not known as the mobile continent for nothing. High penetration of mobile devices, and growing access to cheap smartphones, is helping African countries to leapfrog legacy, fixed-line computing frameworks. At the same time, many of these economies are growing strongly, something that obviously creates pressure for a more convenient and safer way to transact.

We can thus expect mPOS to lead Africa’s move towards digital payments. The Juniper report shows that the 1.7 million mPOS terminals current in use across Africa and the Middle East will rise sharply to 4.7 million in 2023, a growth of 176 percent.

POS vendors look to mPOS

However, it isn't just small businesses who will be crucial to this trend. Established POS vendors, such as Verifone and Ingenico, are expected to increasingly look to mPOS as an area where significant expansion can be achieved.

Research author Nick Maynard commented: "As a result of the popularity of Square and iZettle, traditional POS manufacturers have identified mPOS as an important way to diversify revenue streams, at a time when established revenue streams are losing momentum."

The role of biometrics

The study also predicts that biometrics are set to become an increasingly common part of mPOS devices, with biometric-enabled offerings set to reach almost two million by 2023. This figure will represent just under 4% of the total number of mPOS terminals that are predicted to be in use by then.

A key milestone was the publication by EMVCo, the organisation in charge of the EMV standard, of extended technical requirements for payment terminals to support the use of biometrics in a standard and more secure manner during payment transactions. These requirements are also expected to facilitate and streamline the deployment of biometrics on mPOS.

On its side, Gemalto has developed a new payment chip platform that will support the new EMVCo-compliant biometrics on POS and mPOS terminals. This innovation has been launched by Gemalto on contactless cards, which support the use of biometric verification at the terminal.

POS deployments are becoming increasingly significant in emerging markets due to sustained period of economic growth characterised by a strong transition from cash to digital payment. Gemalto recently launched a biometric card with an embedded fingerprint sensor, which could be ideal for African countries that are planning to move towards a cashless society, and that thus require secure methods of securing and facilitating digital POS payments.


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