What is mPOS and how does it work?

What is mPOS and how does it work?

Hungry? Order your favorite food and pay from your digital wallet to enjoy a hearty meal. Want to go out somewhere? Book a cab and get the payment done with a swipe of your debit card. Want to gift a piece of jewelry to your loved one on a month-end? Pay via Credit card after placing order.

Who needs cash anyway?

Well, that’s how modern day transactions look like!

There were days when making a transaction in real time was troublesome, either due to low cash or due to lesser options to pay. But now, we’re living in an era of digital payments which allows us to perform a financial transaction swiftly and securely.

It’s interesting to see how merchants have moved along with this technological advancement and got rid of their huge cashboxes and that mighty red register! Thanks to mPOS that has mitigated the tedious task of maintaining all those transactional records for the merchants.

What is mPOS?

mPOS or mobile point-of-sale is the technology that facilitates a transaction to be performed in a totally cashless mode. It is a card swipe machine, a sort of handheld device which is connected to the merchant’s computer. This reads out the customer details from the card and enables the merchant to charge the mutually agreed amount from the customer’s account safely and securely.

mPOS is portable unlike the traditional POS. mPOS, by virtue of its handheld feature can also operate remotely with the help of a network connection. This opens up a newer horizon with varied scopes of utilization than a POS which is fixed at the merchant counter. You might have seen such legacy POS machines at the checkout counter of any retail mart.

Why mPOS?

There has been a visible surge in the usage of mPOS device not only in India but throughout the world where the ecommerce business took the steering wheel.

According to a detailed research report by a profound group of market research experts, the global market for mPOS was valued around $US26 Billion and is expected to reach higher values. As analyzed and interpreted by these group of experts, the prime reason behind this huge estimated market value for mPOS is the higher adoption and usage rate for Master cards, VISA cards and other modes of cashless transactions.

There has been a rise in the market share of third party payment institutions which offer such cashless transaction facility to small, medium and even to large business. mPOS is being used conveniently by business of any size from a grocery store round the corner to a multi-chain hotel in a plush location.

According to the same report as in here, North America accounted for the most significant market share for mPOS in the year 2017 followed by Asia Pacific and Europe at third position.

Another significant reason for such growth of mobile POS (mPOS) market is the various Government initiatives that are being taken to prioritize digital mode of transactions over the traditional ones.

Indian government as an instance adopted the demonetization policy in 2016 year end which drifted the country towards a cashless economy. Third party institutions like PayTm launched their famous ‘Paytm karo’ campaign and soon other providers like PhonePe, Google Pay and Mobikwik followed suit.

This allowed ecommerce giants like Amazon.in, Flipkart, Myntra etc. to improvise their ‘Cash-on-Delivery’ model to instead have their executives carry a portable mPOS device to allow the buyers to swipe their cards right at the time of accepting delivery.

This was a boon to the e-retailers as they got one extra chunk of trust from their customers who were earlier skeptical to pre-pay against their orders in the fear of not receiving their products or getting a wrong product.

Talking in terms of Indian demography, this financial support and facility of mPOS as a feature has led not only the urban but also the rural population to join hands in this digital economy.

Interestingly, mPOS is not just about the convenience of swiping cards and processing payment rather it has other salient features to offer to the merchants too.

mPOS can:

  1. Collect important customer information and submit the same to a cloud based CRM after processing the payment thus allowing to perform a detailed analysis on the customer base later.
  2. Be integrated remotely with any cloud based ERP platform and accounting software and keep updating the systems with inventory and finance related information respectively.
  3. Also generate billing invoices and email it across to the customers.
  4. Allow for a very quick and convenient way for customers to check-out.

How does mPOS work?

mPOS as it sounds like, is definitely not a standalone device that gets connected and helps in processing payment but it is more like plethora of things working together to form an ecosystem and then further work in sync. It isn’t like it will need your stars to be aligned to get this thing started. It just works! Smart and easy!

The mPOS system has got multiple stakeholders with predefined roles as described below:

1. Application provider: This is of utmost importance as they will help you with the features that are specific to your business and provide you with dashboards in the application. For instance, a retailer might require the application to interact with his inventory and CRM systems whilst a financer might want the application to interact with his CRM and accounting software as well.

2. Card Reader Providers: They are the manufacturing people who will help you to get one of their devices which can scan and read customer cards in order to process payments. This is what you see physically as a device which gets plugged to your smartphone via audio jack or via Bluetooth also.

3. Telecom: You will need them on every step as an internet connection is a compulsory thing for mPOS device to work.

4. Payment Gateway: This is nothing new as it is a common feature in ecommerce websites. Similarly for mPOS, you will need a payment gateway provider.

Payment gateway

5. Banks: Obviously, for a payment gateway to happen, you’ll first of all need a merchant account with your banking partner.

6. Security Experts: These are the people who are profound in terms of providing digital security towards the transactions and asses any vulnerability and then fix those beforehand.

7. Support & Service: This is the body which helps in onboarding new merchants and provide support wherever and whenever required.

8. mPOS solution provider: This is the only body that the merchant has to regularly be in touch apart from occasionally contacting the support providers. In fact, the solution providers perform the entire required liaison with the other bodies mentioned above so that merchants need not do so.

Overall, mPOS is a technology which is swift, secure, reliable, and convenient and a modern way to allow digital transaction with some extra features as well. The growth of this technology is directly proportional to the growth of financial institutions like the banks and vice-versa.

Looking at the big picture, such technologies are going to stay for a longer while and open up newer possibilities for merchants as well as mPOS providers in the days to come.

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