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December 18, 2019

Evolution of mPOS disrupts the payment industry

By Leo Machado

The evolution of mPOS has been one of the most exciting and disruptive payment trends this year. Leo Machado, Product Director at Trustonic, writes

Using consumer off-the-shelf (COTS) smartphones for payment acceptance is delivering huge benefits to traders, small retailers and SMBs, as well as payment platforms and solution providers.

Adoption costs are plummeting, enabling a broader range of merchants to accept card and mobile payments. This is in turn is increasing customer satisfaction with reduced queuing time and enabling more personalised check out experiences. It is no surprise then that the global mPOS market was valued at $26bn in 2018 and continues to rise – reports predict the market will grow by 35% from 2018 to 2025. Early adopters in the hospitality and retail sectors have been quick to adopt this trend and other verticals won’t be far behind.

Threats to data and apps remained a challenge. Although legislative mandates like PSD2, Strong Customer Authentication and GDPR have been driving forces for the development and adoption of better security, many at C-level still don’t fully recognise the security risks that must be guarded against when taking new app-based banking, fintech and payment services to market.

Fraudulent transactions emanating from compromised devices, for example, is a real security threat that must be taken more seriously.

That said, there has been good progress in the app security space. Banks and financial service providers are realising that there doesn’t have to be a trade-off between security and functionality. Cybersecurity can be a tool to deliver richer and faster services that enhance the user experience, not limit it.

A look to 2020

The continued success of smartphone mPOS depends very much on consumers’ ability to safely and securely make high-value payments. This requires the whole payments chain to work together to deploy solutions that achieve secure PIN entry on all COTS devices.

While we might not reach ‘mPOS acceptance nirvana’ in 2020 – i.e, secure payment acceptance and PIN entry happening on the same device using the smartphone’s NFC technology – we’re not far off!

When investing in mobile point of sale solutions, merchants will need to focus on identifying solutions that are secure by design and protected by in-app protection solutions that have been evaluated by relevant industry bodies, like the Payment Card Industry Security Standards Council and EMVCo. We are starting to see more of these solutions available on standard smartphones and this will continue into 2020.

Away from the commercial world, government initiatives are working hard to drive greater financial inclusion. In Indonesia, for example, the provision of secure eKYC, with our partners like VIDA, is driving striking shifts in financial inclusion – from 20% in 2011 to 49% in 2017.

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