SoftPOS technology offers a handy way to both make and accept electronic payments. SoftPOS solutions are particularly relevant for micro-merchants and SME.Large-size payment services providers and software platforms also need to offer SoftPOS features within their omnichannel solutions. So, in this article we are going to provide a brief description of the respective solutions. First, we will look at the history of contactless payment technology development. Then we will outline some benefits and limitations of currently available solutions.
SoftPOS: historic perspective
Traditionally, electronic payments were associated with payment terminals. To make a payment, you had to swipe your credit card through the terminal and let it read card data. Emergence of integrated circuit solutions resulted in introduction of EMV cards and respective standards. Today EMV compliant POS terminals are widely used around the globe. Even more recently, NFC technologies and circuits became the basis for contactless payment solutions. Presently, high availability of mobile devices makes it possible for card readers to penetrate the market.
NFC contactless payments become one of the dominant payment types in the post-pandemic world. More and more buyers and sellers resort to contactless payments made through their mobile devices. As a result, more companies need to implement the respective technologies, allowing them to handle contactless payments.
Now, is there anything wrong with payment terminals? Of course, not. Only, a terminal is an additional piece of hardware which costs several hundred dollars. And terminal fulfillment and maintenance are additional cost items for the merchant. That is why, it takes time for an SME to cover these costs if it uses a payment terminal solution to accept payments. A SoftPOS solution looks more beneficial from the standpoint of both cost and hardware involved.
So, how can a merchant implement a SoftPOS solution?
If you need to accept card payments, but do not want to spend resources on payment terminals, you can use your mobile device as a terminal instead. Keep in mind, that the device (smartphone, tablet, or wearable) should have an inbuilt NFC circuit. It is this circuit that enables the device to read payment data, essentially, making it a contactless payment terminal. Now we should remind that every terminal needs a terminal management system (TMS). So, a SoftPOS is a special app that serves as a TMS within your NFC-enabled smartphone. Most SoftPOS apps are available for free download and installation. That is why small-size businesses in both developed and developing countries can easily enjoy the benefits of SoftPOS solutions.
Benefits and limitations of SoftPOS
No additional hardware required
Like we said, SoftPOS technology does not involve any hardware besides the NFC-enabled device. It is this device that serves as the POS terminal, making the solution a truly mobile one.
Just like any payment software, a SoftPOS has to be PA DSS-compliant. If it is, then merchant is able to observe the rules of PCI compliance for POS systems. The most common PCI audit procedure for a small-size merchant operating through a SoftPOS is the completion of an SAQ.
Maximum payment amounts
All NFC contactless payments haverelatively low amount thresholds. In order to get a larger payment authorized, the customer has to input PIN. Early SoftPOS solutions did not support PIN entry. Nowadays, an innovative PIN on Glass technology allows the cardholder to enter PIN onto glass screen of the device. As a result, it enables merchants to process large payment amounts (requiring PIN entry) using SoftPOS systems.
SoftPOS can work only on an NFC-enabled device, operated by Android OS. This means that owners of iPhones need to wait a little longer.
At the same time, the software developed for Android-based payment, can also work as a SoftPOS application.
Mobile POS platforms
Mobile POS platforms, generally, operate through mobile devices. So, they can support SoftPOS features, without requiring additional development efforts.
When it comes to payment processing, NFC-enabled devices with SoftPOS systems often represent a better option than payment terminals. They are especially for micro-merchants and SMEs.
Want to know more about SoftPOS solutions? You are welcome to familiarize yourself with the UniRead module of UniPay Gateway, our open-source omnichannel payment gateway solution.