IHS Technology has estimated a 72% compound annual growth rate (CAGR) for the number of NFC-enabled mPOS solutions being used worldwide (between 2012 and 2018). But this number assumes reasonable uptake from merchants. It does seem as though some merchants are still reluctant about the technology due to data vulnerability concerns, particularly those in the retail sector. With the mPOS environment being increasingly crowded with solutions, particularly those that are cloud-based, it has been said that many retailers not only feel confused, but also hold concerns over the security of using an unfamiliar system for handling transactions.
Perhaps a new framework, backed by a body jointly owned by American Express, Discover, JCB, MasterCard, UnionPay and Visa will give these merchants more confidence in digital payment security. The new EMVco tokenisation specification aims to enable smart devices to make a payment, by combining chip data elements with a token and transferring this to the mPOS terminal via NFC. With a mobile wallet this would transfer to the merchant via the wallet API. Many industry advocates however, state that the real reason for concern is not around security of digital payments, but rather down to a retailer’s unfamiliarity with the new business models that mPOS integration imposes, making them apprehensive about change in general.
The integration of mPOS changes not only the location of payment points in a store and the customer’s shopping experience, but it can add to the complexity of processes such as de-tagging, security, bagging products, fetching products and so on. One can therefore understand why changes to management processes and the overall traditional retail model can make the integration of mPOS unattractive and lengthy to some merchants. It is thought that security is perhaps just an easier blame for not embracing both mobile payments and mPOS.
It will be interesting to see whether such standard will help banish any concerns the industry still has around security. Given the reputable strength of EMVCo and a history of strong initiatives – notably the success of EMV migrations in Europe and Canada – IHS believes that the release of this standard will have a positive effect nonetheless, not just on the industry’s confidence in NFC and mobile payments, but also the uptake of more advanced mPOS solutions. If the belief in NFC strengthens and we start to see more widespread deployment of the technology in all areas of retail, it is assumed that those choosing to implement mPOS systems in the future will naturally select solutions that accept this form of payment. The long-term consequence of such trend is likely to excel the shift from dongle-type or card-reader only mPOS solutions towards more integrated and ‘purpose-built’ devices.
Nevertheless, whether a global standard will actually accelerate mPOS adoption any further, it’s safe to say that whilst mobile payments and mPOS are technically separate concepts within the same eco-system, its areas of development are beginning to overlap and it will become increasingly important to consider the implications that one has on the other.
by the Editorial Staff
