Mobile point-of-sale (mPOS) solutions have enjoyed widespread uptake in much of North America, and the region’s related market could see continued growth if solutions providers, government officials and other stakeholders play their cards right.
A recent analysis valued the global mPOS industry at $26 billion in 2018, and it is expected to increase at a compound annual growth rate (CAGR) of 18.8 percent between 2017 and 2026. North America has an opportunity to share in that expansion, too: A study reported that the region’s market produced more revenue than those in the Asia Pacific, Europe, Latin America or the Middle East and Africa in 2017.
Still, it’s not all smooth sailing and easy growth. This Deep Dive explores the state of the mPOS industry in North American countries, the challenges that exist and what it takes to encourage adoption.
Receptivity in U.S. and Canada
Consumers in countries that commonly see credit and debit card use expect all retailers to allow them to pay in those ways, thereby generating merchant demand for mPOS solutions. The U.S. is one such nation, with a June 2018 Statista survey reporting that 83 percent of Americans aged 30 to 49 owned credit cards. Card payments are also popular in Canada, with credit comprising nearly 22.9 percent of total payments by volume in 2017 and debit responsible for 26.5 percent. These numbers are up from 18.5 percent and 21.5 percent, respectively, in 2012.
Many consumers appear particularly interested in paying on merchants’ or sales associates’ mobile devices. A December 2018 SOTI study of Canadians aged 18 to 60 found that 78 percent would like in-store assistance from sales associates equipped with such technology, compared to 62 percent who desired self-serve offerings.
Canadian and American financial institutions (FIs) and governments have also worked to help merchants answer these consumer demands. FIs have seen opportunities to differentiate themselves and gain competitive advantages by providing mPOS solutions that satisfy small and mid-sized clients’ desires for card acceptance, for example. A 2018 Market Research Future press release also noted that these countries possess the “technological infrastructure” necessary to facilitate widespread wireless POS adoption, while a Prudour Pvt. Ltd. report revealed that government investment in such frameworks is key to advancing mPOS adoption.
Obstacles in Mexico
The United States’ southern neighbor has not yet seen the same mPOS proliferation. Mexico has a high portion of unbanked consumers, making cash a popular payment method and rendering mPOS less significant. Ninety percent of the country’s transactions were made in cash in 2016, according to PYMNTS’ estimates, and more than half of the population remained unbanked in early 2019. Greater digital payment usage could be encouraged, however, should FIs or other parties reduce the fees associated with bank accounts — something that has continually priced out many low-income consumers.
Rural merchants may still be hard-pressed to deploy mobile solutions like mPOS due to limited cellular and internet coverage and infrastructure, an issue cited as recently as February 2019. It is likely that Mexican merchants could quickly take advantage of mPOS offerings if consistent connectivity were provided nationwide, though, as 91 percent of Mexican citizens reportedly owned smartphones in 2016. Government efforts to provide greater support for mobile systems could help remove this roadblock to wider mPOS usage.
The mismatch between the payment methods mPOS solutions can support and the instruments consumers can supply is another major growth hurdle. The Mexican government has been exploring how to help more consumers move from cash to digital payments, which could eliminate this difficulty. Amazon is speaking with the country’s central bank about a solution that would enable consumers to pay in store or online using mobile devices and QR codes, according to March reports. Others, like payment card reader provider Clip, are also seeking to help innovate the Mexican economy.
Mexico isn’t alone in facing mPOS adoption challenges. U.S. and Canadian merchants, solutions providers, government officials and financial companies must also continue investing in and innovating mPOS technologies so they do not become outdated. Mobile wallet usage represents just 1 percent of U.S. payments and 3 percent of those in Canada thus far, but interest in contactless options has been growing. Most 2018 consumers who used mobile wallets were “high-income” (40 percent) and aged 25 to 34 (35 percent), according to recent research, suggesting that significant and increasing shares of purchasing power reside with those who are interested in this technology.
Although mPOS has made notable inroads in North American economies, implementation is far from equal across Canada, Mexico and the U.S. If various stakeholders wish to advance the technology’s adoption and maintain its relevance in an ever-changing commercial landscape, they must turn their attention to investments and policies required to provide the necessary cellular infrastructure. This will ensure they can support the devices, enable consumers to make digital payments and guarantee the solutions accept popular digital payment types.