Industry experts predict that tap-to-phone payments will gain popularity.

Industry experts predict that tap-to-phone payments will gain popularity.

Companies have been looking at ways to make contactless payments more popular, such as turning a smartphone into an automated payments processor.

Mobile point-of sale (mPOS), is the use of a smartphone as a terminal to process payment transactions. It’s different from a fixed terminal. Smartphones equipped with near-field communication chips (NFC) can digitally process transactions with just a tap of a card, or phone.

“mPOS enables businesses to accept card payments where they previously could not” and helps retailers such as cab drivers, who operate a mobile business, according to Juniper Research.

Globally, the shipment of mPOS terminals is expected to increase to 32 million units in 2026, an increase of 56% from 20 million units this year.

In an interview, Nick Starai, NMI chief strategy officer, stated that both consumers and merchants adopted contactless payments to avoid the possibility of contracting COVID-19.

Starai stated that many businesses wanted to “meet customers on the curbside” and had a handheld payment terminal with a tap-to pay payment feature. This “drove adoption of contactless and portable POS.”

NMI, a payments infrastructure company that provides omnichannel payments, is working on a pilot program with Mastercard to develop a mobile POS acceptance device. The connected smartphone will connect to the Microsoft Azure cloud platform. This will allow transaction data to be stored on a digital cloud, rather than the phone or hardware.

mPOS’s low price, low hardware integration, and mobility will draw many small- to medium-sized businesses (SMBs), Sumit Vaishney, vice president sales and marketing at OLS Payments said in an interview.

Starai stated that NMI is working to convert Android phones into POS units, “as Apple’s tech stack isn’t as accessible to developers.”

Apple purchased Mobeewave, Canada’s contactless payments company, in July 2020 for $100m to improve its devices’ digital and contactless payment capabilities. Mobeewave’s technology “could transform iPhones into mobile payment terminals”, Bloomberg reported.

More than 100 million Americans are expected to use proximity mobile payments, compared to 72 million in 2019, according to a May report by eMarketer. According to the report, “more than one-in-two US smartphone owners will use proximity mobile payments.”

Bloomberg reported that Square is looking at developing an iPad into a POS terminal to allow customers to tap and pay for their purchases. The fee associated with Square’s current POS for card transactions is 2.6% + $0.10. Square’s POS prices range from $9 for a magstripe reader up to $799 for a fixed tablet-POS. The company has not yet revealed how much it will charge for the new iPad POS.

SMBs looking to lower digital payments costs will find that mPOSs are a good option. However, it requires minimal hardware integration and there is not much scope for this to lead to “reduced interchange charges,” Varshney stated.

Last month, Visa launched its tap-to-phone payments pilot in the U.S. with 50 merchants in the Washington, D.C., area. To help SMBs accept digital payments, the company plans to expand its pilot program to other major U.S. locations.

SMBs participating in the pilot are not charged for Tap to Phone because transactions are processed as Visa transactions in the same manner as transactions on traditional terminals, a Visa spokesperson stated in an email.

About 65% of U.S. consumers would prefer to use contactless payments post-vaccine, while 47% won’t shop at a store that doesn’t offer a contactless way to pay, Visa said in a January report.