Is the future of payments mPOS?

Are we looking at a faster, easier and more convenient technology?  

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Is the future of payments mPOS?

Aug 6, 2018

Are we looking at a faster, easier and more convenient technology?

Tap. Dip. Swipe. It almost sounds like a jingle or a dance move. But it’s what’s happening with credit and debit cards. Consumers used to swipe their credit and debit cards but now they typically “dip” (and sometimes “tap”) them at the point-of-sale. It won't be long before we see the convergence of two trends that promise to make the payments process faster, easier and more convenient than ever before: mobile point-of-sale, mPOS.

The mPOS impulse

Consumers and payments companies should expect to see many more mobile point-of-sale devices— that is, smartphones, tablets and other wireless devices that are equipped to take payments. According to a recent article in the Payments Journal, “there will be 27.7 million mPOS devices in circulation by 2021, an increase from 3.2 million in 2014.”1 

It’s already clear to traditional retailers that mPOS is the future, in part because the ability to take payments from anywhere in the store encourages impulse buying and reduces checkout lines. It also allows retailers to convert checkout space to selling space, by converting cashiers to salespeople who can make a sale from anywhere in the store.

This helps explain why a survey of retail executives and tech managers in the U.S. and U.K. revealed that the most in-demand technology for retailers is mobile payment capabilities (65%), followed by self-checkout (44%).2 

Yet the growth in usage of mPOS devices won’t be limited to retail stores; more and more businesses people and vendors will be utilizing them wherever it makes sense to take payments. That means you’ll be seeing them in all manner of remote locations, in use at concerts, restaurants, sporting events and festivals, just to name a few examples.

Regardless of where mPOS devices are used, the U.S. is well positioned to continue to lead the way in the wireless POS market, thanks to the country’s advanced technological infrastructure. The increase of mPOS should make up a big part of the growth of the global wireless POS terminals market, which is “expected to have a compound annual growth rate (CAGR) of 13 percent from 2017 to 2023,” and become a $12 billion market by the end of that period.3 

mPOS and Biometrics

The other trend that seems poised to move the payments industry forward in conjunction with mPOS is the rise of biometrics, the process by which a person’s unique traits are used to confirm identity. New and better methods to authenticate users are seen as vital, because passwords and PINs are “inherently weak authentication mechanism[s].” 4

As recently noted in a TSYS blog on Biometrics, innovation in this area is proceeding quickly. For example, as stated in the blog, “Mastercard has been running pilot projects for smart cards with on-board fingerprint sensors,” with fingerprints just one example of how physiological biometrics will be utilized.

In fact, going forward, all manner of physiological data might be used to help identify individuals, including facial recognition and hand geometry. Samsung has even applied for a patent for a device authentication method that utilizes a users’ blood pressure.5 

Additionally, physiological biometrics will likely be used in conjunction with behavioral biometrics and even gesture-based authentication.6 For example, an individual’s keystroke rhythms could be measured to develop a unique behavioral biometric template for future authentication. Or a person’s walk might be recorded so they could be recognized by their gait. Yet one disadvantage of gesture-based authentication is that “extra equipment may be required to perform user login, which means it may not be portable and not suitable for daily use.”7

Touché and Token

While it’s impossible to predict which tools or authentication methods will gain traction, some compelling examples of innovation include Touché, which promises the ability to make what have been described as “naked payments” by linking fingerprint biometrics with credit card information. With Touché the user simply places two fingers over a fingerprint scanner to make a payment, which seems simple enough, though the path to mass adoption might be a long one. That is, “there is an important infrastructure issue to overcome, with few (if any) merchants currently using fingerprint scanners to accept payments,” notes Find Biometrics.8

Another intriguing invention is the Token biometric ring, which is designed to “unify the experience of proving who you are,” thereby obviating the need to carry payment cards or use passwords or even carry house keys or car keys. When you put the Token ring on, it scans your fingerprint and activates; take it off and a proximity sensor deactivates the ring. Making a payment using the ring is simple; “just hold your Token over a mobile payment reader or credit card terminal, and after a couple of seconds, see that you’re approved to stroll out,”9 says Melanie Shapiro, CEO of the company. 

But even if new devices or infrastructure don’t gain a significant foothold in the next year or two, the rise in importance of mPOS is prompting leading POS terminal providers to adapt, with the card brands making their mark as well. For instance, in May Ingenico announced  a new biometric point of sale (POS) terminal, one which allows customers to authenticate with a fingerprint. And in early 2018, Visa “launched pilots of an on-card biometric function for contactless payments, prompting Visa’s head of global merchant solutions to say, “The world is quickly moving toward a future that will be free of passwords, as consumers realize how biometric technologies can make their lives easier.”10

Challenges for mPOS, biometrics

There are still challenges that need to be addressed for both mPOS and biometrics to realize their considerable potential. Some issues are relatively straightforward. For example, “many retailers who’ve adopted or experimented with mPOS have [said] one of their biggest issues is battery life,” notes Mobile Payments Today (MPT). Obviously, it would be helpful if longer battery life allowed mPOS devices to put in a full day’s work, without needing to be recharged. Meanwhile, theft and security of devices remains a concern. “Mobile devices and mPOS terminals can be targets for theft or hacking, which can be costly for retailers and potentially disastrous in terms of payment security and brand image,” adds MPT. 

As for biometrics, most commentators—despite noting that “biometric applications are making marked improvements over current security protocols”—warn that “the risks of using biometrics include … data and network hacking, rapidly evolving fraud capabilities, biometric enrollment security, familiar fraud [that is, fraud by a family member or friend], spoofed sensors, and sensor inaccuracy,” with data security at the top of the list of security and privacy concerns.

What will the future hold for payments and mPOS? Judging from the range of technology, the future may just be a tap, dip or swipe away.

1. 7 Trends for the Future of Payment Processing, Payments Journal, http://paymentsjournal.com/7-trends-for-the-future-of-payment-processing/

2. Study: The most in-demand technology for retailers is … Chain Store Age, https://www.chainstoreage.com/article/study-most-demand-technology-retailers-is/

3. Wireless POS terminal market – 12 billion by 2023, Market Research Future press release, https://www.openpr.com/news/1025082/Wireless-Pos-Terminal-Market-12-Billion-by-2023-growing-at-a-13-CAGR-with-Key-Players-by-Ingenico-Verifone-First-Data-Winpos-BITEL-Cegid-Group.html

4, 6, 7. A User Authentication Scheme Using Physiological and Behavioral Biometrics for Multitouch Devices, The Scientific World Journal, https://www.hindawi.com/journals/tswj/2014/781234/

5. Samsung patents method to authenticate through blood pressure, Pocketnow, http://pocketnow.com/2018/01/26/samsung-patents-method-to-authenticate-through-blood-flow

8. OCBC to Enable Naked Payments with Merchant Partners, Find Biometrics, https://findbiometrics.com/ocbc-naked-payments-505246/

9. Authentication is broken, here’s how Token fixes it, Token blog, https://blog.tokenize.com/authentication-is-broken-heres-how-token-fixes-it-in-simple-terms-872844557015

10. Biometrics could be the future of mPOS, PYMNTS, https://www.pymnts.com/news/biometrics/2018/biometrics-mpos-ingenico-visa-mastercard/

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