Mobile POS market expected to increase 400 pct. by 2019

 In Blog

If you’re overwhelmed by the amount of choices in the current mobile point-of-sale (mPOS) market, prepare to feel that way for the next four years, because this sector will only continue to grow.

A new report from 451 Research predicts that the global installed base of mPOS devices will increase fourfold to just over 54 million units at a 32 percent compound annual growth rate in 2019 from the current 13 million devices in the market today.

Two main factors are helping to drive this increase in the next four years, according to Jordan McKee, a senior analyst who covers mobile payments for 451 Research.

“At a high level, there are more mobile lines than there are people, and mobile phones are becoming ubiquitous,” he said. “When you think about that in the context of emerging markets like India, you see payments card penetration starting to grow very quickly, but the POS network is constrained because of costs and issues with getting merchants up to speed.

“[mPOS] is nice bridge technology to grow and support card-based commerce.”

In more developed markets such as the U.S., mPOS has become more of a complementary addition to the traditional POS terminal, and McKee expects this to continue in the coming years.

“In the past, you saw mPOS in retail environments in very niche areas such as linebusting and popup shops,” he said. “What we see happening is that it’s moving from a technology that had some unique use cases to one that’s working its way into day-to-day operations.”

At this year’s National Retail Federation Big Show event in New York City, Mobile Payments Today spoke to several mPOS providers who mentioned specialty retailers’ desire to engage customers as they browsed a storefront rather than at traditional checkout areas.

The idea with mPOS in such an environment is to capture the sale when consumers make a decision on a high-ticket item such as a new refrigerator and perhaps not give them a chance to change their mind as they walk back to a traditional checkout area.

McKee also cited enterprise examples such as Delta Airlines using an Anywhere Commerce device to accept payments for food and drinks, and insurance company agents carrying mPOS units to collect deductibles.

Despite the anticipated surge, McKee doesn’t expect mPOS to replace traditional terminals in the near future.

“Where I think there will be a little bit of displacement [with mPOS] is emerging markets where [traditional] POS didn’t have much traction to begin with,” he said. “I think in the SMB space, when you have tablets come into the conversation like a ShopKeep with attractive systems, I think that’s another scenario where you’ll see some displacement. Generally speaking, the displacement will be somewhat minimal, at least over the next few years.”

McKee said that 451 Research expects the Asia-Pacific region to become the largest mPOS market by 2019.

He noted the current heavy dependence on cash-on-delivery for e-commerce transactions, particularly in India. This could open the door for more mPOS deployments as credit and debit card penetration increases across the country. Some industry estimates pegged the market at 520 million cards at the end of 2014 with some 500 million debit cards included in that figure.

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