Merchants who want to accept contactless payments, either by card or mobile wallet, have traditionally needed card readers to do so, but a new technology, known as software point-of-sale (SoftPOS) is changing that.
Contactless payment uses a method of wireless data transfer called Near Field Communication (NFC) to share information without the need for an internet connection. NFC is what allows card terminals to read the chip on a debit or credit card and to accept payment from mobile wallets.
For mobile devices, NFC works in both directions; as well as being able to broadcast an NFC signal, smartphones are also able to read NFC tags. This is how apps like Android Beam can be used to share files wirelessly, and how smartphones are able to read NFC chips on everything from museum displays to medical devices like continuous glucose monitors.
SoftPOS, otherwise known as tap-to-phone or tap-on-phone, takes advantage of the fact that phones can not only send an NFC signal but also receive one.
Despite the obvious convenience it presents, SoftPOS is still largely a niche payment method despite payment giants like Mastercard and Visa running programs to help develop the technology.
Read more: Visa Tap To Phone Expands POS Acceptance For Retailers
But industry players see the huge potential it presents for business growth. “I am a firm believer in the development of SoftPOS solutions, which involves transforming a smartphone or a tablet into an acceptance solution, [because] it meets a lot of the requirements of merchants,” Frédéric Mazurier, chairman of Paris-based payment service provider Market Pay, told PYMNTS in an interview last year.
Watch Mazurier’s interview: Merchant Involvement in European Payments Initiative Has Been Less Than Satisfactory
Learn more: Making Contactless Payments Acceptance Affordable, Flexible for European Merchants
Against that backdrop, the French firm has launched a SoftPOS solution, PayWish, in collaboration with Dejamobile, a French FinTech leader in mobile and connected equipment payment solutions, enabling European merchants to turn their Android smartphones or tablets into a mobile POS terminal with Dejamobile’s SoftPOS technology.
iPhone Needs to Get With SoftPOS Program
Other recent developments are set to accelerate the technology’s uptake.
In May 2022, PayPal’s POS solution Zettle launched a SoftPOS it calls Tap to Pay. The new function enables users of the Zettle app to accept contactless payments directly on their Android devices with no additional hardware or fees.
Read also: PayPal Launches Zettle Terminal in the UK
As PayPal’s Ben Ramsden has stated, the readerless POS solution is expected to be a gamechanger for small businesses: “The purpose of the functionality is to allow small businesses to get set up and take payments very quickly with no additional hardware and no additional fees,” he told PYMNTS.
Watch Ramsden’s interview: UK SMEs Give Customers the Cheap, Contactless Payments They Want
Because many merchants already use PayPal products, the company is well-positioned to distribute SoftPOS to millions of preexisting customers.
Arguably, the biggest barrier to the widespread adoption of SoftPOS comes from the way NFC works on iPhones. As stated in one of Apple’s developer documents, “Core NFC doesn’t support payment-related Application IDs.”
Whereas the more flexible, open-source Android operating system has allowed companies including Samsung, American Express and Skrill to develop their own contactless payment apps for Android, no alternatives to Apple Pay exist for iPhone users. And considering Apple’s significant share of the global smartphone market, the iPhone’s current incompatibility with SoftPOS will likely continue to inhibit the growth of the technology.
The good news for iPhone users who want to use tap-to-phone payment is that Stripe is piloting a SoftPOS solution in the U.S., while Square has announced that it expects to be able to offer the service to its business users by the end of the year.
Between Apple, PayPal, and a currently-in-pilot Android app from SumUp, direct-to-phone contactless payment could blow up relatively soon.
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