Smart POS: The Solution to Increasing Competition

August 2022

Fintech & Payments

Jordan Rookes

Research Analyst

Smart POS terminals are capable of offering enhanced capabilities that can ease the common burdens faced by retailers, such as inventory and employee management. Whilst mPOS and soft POS solutions are effective payment processors, they lack any additional features by design, instead opting to prioritise convenience and portability. As such, smart POS systems are able to effectively differentiate themselves and establish greater value for fixed POS through these appended features.
 
Smart POS systems can include a broad variety of additional features, including, but not limited to, inventory management, in-built cameras as well as analytics and reporting. These convenience and analytical tools should be the primary focus when advertising fixed POS terminals; highlighting additional benefits that these systems provide beyond just payment processing. It is these features which, when combined with retailers’ potential desire to stick with a system they are familiar with, will aid fixed terminals and dedicated POS to successfully compete with mPOS and soft POS solutions.
 
Inventory Management
 
Smart POS terminals often include inventory tracking and management solutions; representing a potential efficiency and cost-saving tool to retailers. These terminals can provide a range of capabilities within inventory management functionality which may benefit retailers.
 
By default, these terminals can track product inventory and provide real-time data on when stock replenishment is necessary. This can not only benefit merchants by eliminating the need to expend man hours physically checking the stock level, but may also result in cost savings by reducing the costs associated with either having too much inventory or too little and running out.
 
Larger retail chains may choose to upgrade on this functionality by purchasing synchronised smart POS terminals for each of their outlets. These terminals would allow stock to be tracked across stores; enabling the possibility of stores moving inventory between stores as needed, by providing retailers with a top-down view of their inventory as a whole. This would also benefit management, as it would enable information to be collected from a remote location; providing greater flexibility and control within the retail environment. Lastly, this solution may provide greater cross-outlet cohesion; offering the possibility to track pricing, offers and discounts across paired establishments. This would all be capable through the terminal; ensuring consistency within the business.
 
More sophisticated smart POS inventory management solutions can automatically reorder stock based on current inventory levels through the application of a perpetual inventory system. By pre-setting re-order levels of inventory, the POS terminal is able to automate the purchase process of new stock; removing a burden for the retailer.
 
eCommerce Integration
 
As eCommerce continues to rise in popularity, and the relationship between brick[1]and-mortar stores is changed in response, there is an opportunity for smart POS terminals to bridge the gap between the two sales channels.
 
The ability to create cross-channel synergies would be a compelling proposition for businesses; making the prospect of purchasing a smart POS terminal appealing. Software that enables physical and eCommerce stores to be run across a shared programme and interface can result in improved marketing campaigns, greater inventory management, online visibility and ease of order fulfilment across various channels. Furthermore, integrated eCommerce software can eliminate the need to manually input data, with the POS system syncing order info from eCommerce sales; meaning that retailers do not have to manually reconcile data.
 
Employee Management
 
Smart POS terminals can also provide employee management software; allowing retailers to plan staff rosters, monitor and track employee performance and productivity, calculate commission and assign specific user roles and permissions. The software is also capable of exporting payroll data into the accounting software of the retailer’s choice.
 
This enables businesses to more efficiently and effectively manage their operations; enabling merchants to manage their staff using state-of-the-art software, embedded in the POS terminal. This can enable merchants to reduce time wastage by manually managing staff rotas, and monitoring employee performance, by automating the process.

• The total number of merchants deploying soft POS solutions will surpass 34.5 million globally by 2027; rising from 6 million in 2022.
• This growth will be driven by Apple’s entrance into the soft POS space; enabling iOS users to access an affordable mobile POS solution. Apple’s decision to enable third parties to develop soft POS solutions leveraging iOS NFC capabilities will result in an influx of iOS-specific services; leading to innovative solutions for merchants.
• The research also predicts Apple’s entry will provide 1.2 billion iOS users with soft POS capabilities; unlocking a previously untapped market. Soft POS is the latest development from Apple within the payments space; building upon Apple Pay and Apple Pay Later.
• Soft POS vendors should leverage Apple’s payment ecosystem by developing innovative solutions such as integrated QR payment acceptance, using Apple Pay and Pay Later compatibility to attract a broader iOS user base.
• Soft POS adoption is being driven by the increasing use of contactless payments – with volumes expected to rise from 195 billion in 2022 to 408 billion by 2027. Therefore, consumers will come to expect contactless acceptance as standard; forcing smaller merchants to adopt contactless-capable POS solutions.
• Merchants are anticipated to embrace soft POS, based on cost savings achievable from eliminating the need for additional hardware, as well as mobility advantages over contactless POS. This will be profound for small-sum and mobile merchants that must accept contactless transactions, but lack the need for high-cost dedicated terminals.
• As such, the research recommends soft POS vendors must look to target micro and mobile merchants; designing solutions that meet their unique needs.