The future of POS is Soft

While the offline payments space has been getting increasingly crowded and tough, with physical POS as a product on an uphill battle with static QR, and payments players getting into each other's territories to capture markets, one product that is slowly but silently making headways is softPOS.

To begin with, what is softPOS?

softPOS is an app based collection tool that helps convert your mobile phone into a POS device without the need to buy any new POS hardware.

What modes does it support? Basically, all of em!

1. It supports dynamic QR for UPI based collection and integration with your billing software

2. It supports tap n pay for all forms of cards - less than 5K needs no PIN, just as in physical POS machines

3. It can support BNPL and EMI options as well

Why is softPOS poised for a breakthrough, globally and in India? Here are a few reasons why:

1. The g forces: The fact that softPOS functions primarily through 4G/5G vs a lot of traditional POS machines (many still use 2G tech) ensures connectivity, even in remote areas - wherever your mobile goes, your POS goes too
2. Ditching the device: In a world where we have given up on a multi-device setup and our phone is our end all and be all, having a physical device for offline devices does fundamentally sound counter-intuitive.
3. Best of both worlds: softPOS gives the security and acceptance of a physical POS, at a comparable cost of a static QR. Afterall, most vendors who have static QR on their shops, do have mobile phones, most which support NFC.
4. Future proofing collections: With e-rupee and innovation in other payment modes, it is important for the collections device to be future proof. SoftPOS being android based and mobile app based ensures that you can add new payments modes with ease without the concern of updating the hardware. (Ofcourse, android based POS machine also takes care of this to a great extent).
5. Happy Feet on Street: While the world goes towards a 'phygital' model, it is important to empower your feet on street with easy payments collection model. Imagine having your agents whip out their phone and accept QR, cards or even account for cash recon on the spot. This enables scaling up feet on street or fleet on street with no additional burdens. Each of their existing phones becomes a payment device.

If SoftPOS is so awesome, why has it not overturned the traditional POS market yet?

Here are a few reasons why escape velocity is yet to be reached:

1. Working on trust issues: If a stranger whips out their phone and asks you to enter your PIN for something you are purchasing, how comfortable would you be? Customers trust dedicated POS terminals much more than mobile phones of merchants for making payments due to the perception that mobile phones can be used to 'hack' or siphon out money from the customer's payment mode (credit/debit cards). This is indeed the hardest obstacle to overcome for softPOS.
2. NFC penetration not at 100%: Unlike in physical POS where swiping is always an option, pure-play soft POS heavily depends on 'tap-n-pay' which requires the feature to be supported on the phone the merchant is using, as well as on the card of the consumer. While most new cards issued are NFC enabled, a lot of consumers still do not enable it for fear of misuse. This is another blocker for mass scale adoption of softPOS
3. Monetization is a challenge: In a market already running on razor thin margins, physical POS offers a monetization for payment companies through sale or monthly rental of the physical POS device. SoftPOS basically eliminates that since merchants would not be willing to pay rental for an app alone. This dis-incentivizes existing large players to completely ditch physical POS and go the soft POS route.
4. Perception of customer experience issues: While from a security as well as fund movement standpoint, there is no difference in soft vs physical POS but in case of physical POS, the payment provider takes the responsibility of issues arising in the device. In case of softPOS, since it is device agnostic - the payment provider does not take responsibility for any issues arising on the device, including any compatibility issues, versioning etc. This may affect merchant experience especially in case of non tech-savvy SME merchants.

While challenges clearly remain, none of them are deal breakers for softPOS to become the ubiquitous payment mode, replacing physical POS and even the static QR. According to me, it is a matter of time, until the mobile phone overtakes the POS machine, just like it did the alarm clock, the MP4 or pretty much every other gadget we used in the past.