Market Challenges And Opportunities

Global Mobile Point-of-Sale (mPOS) Market: Drivers

Rapid mobile and internet penetration combined with increased banking network is expected to drive growth of the global mobile point-of-sale (mPOS) market during the forecast period

The mobile and internet penetration has increased significantly in the recent past among businesses and consumers. The rapid growth of the internet across the globe as transformed the way commerce and monetary functions take place. According to The Mobile Economy report by GSM Association, by 2014, there were 2.9 billion smartphone users worldwide. According to the International Telecommunication Union (ITU), the number of Internet users is projected to reach 3.2 billion by the end of 2015. Furthermore, the number of credit and debit card users are increasing rapidly, owing to increasing number of bank account holders globally. According to data from the World Bank, there was a 20% decline in the size of the unbanked population between 2011 and 2014. Moreover, larger retail chains are focusing on enhancing consumer engagement and offering high levels of convenience to their customers. This, in turn, has increased the demand for mPOS. Thus, these factors are expected to drive growth of the global mobile point-of-sale (mPOS) market during the forecast period.

Replacement demand due to EMV migration is expected to propel the global mobile point-of-sale (mPOS) market growth over the forecast period

Currently, older mPOS systems are being replaced by new mPOS solutions as there is a liability shift toward the adoption of EMV chip and pin after October 2015. These regulations are included, in order to reduce security risks related to card-based payments at POS terminals, namely mPOS. However, transforming to EMV chin and pin-based mPOS would require several years. After October 2015, in case of any card fraud, the party with the less advanced technology will have to bear the liability of fraud. For instance, if a merchant continues to use technology other than EMV chip and pin, they would be held accountable for any fraudulent transactions if the consumer was using a chip and pin card. Hence, these factors are expected to propel the global mobile point-of-sale (mPOS) market growth over the forecast period.

Global Mobile Point-of-Sale (mPOS) Market: Opportunities

mPOS value-added service (VAS) can present lucrative growth opportunities in the global mobile point-of-sale (mPOS) market

mPOS has witnessed significant growth in the recent past. For instance, in June 2012, the U.S.-based company LevelUp started offering 0% payment processing fees in exchange for obligatory marketing services. Furthermore, competition among mPOS vendors is expected to be high in the near future, owing to increasing number of players in the mPOS market. mPOS vendors would need to offer customized mPOS solutions catering to the needs of specific end-use verticals. VAS offers enhanced customer interaction with inclusion of loyalty and reward programs, gift cards, vouchers, mobile discounts, and cash-back promotions.

Convergence of consumer mobile commerce and merchant card acceptance ecosystem can provide key business opportunities global mobile point-of-sale (mPOS) market

Converging consumer mobile commerce such as mobile wallets and card acceptance systems of merchants such as mPOS can provide key opportunities. mPOS service providers are increasingly emphasizing on consumer-facing applications to enhance customer experience and engagement. Meanwhile, revenues from cards are diminishing for card providers due to regulatory pressures and through challenges from non-card payment methods.

Global Mobile Point-of-Sale (mPOS) Market: Restraints

Concerns regarding data breaches expected to restrain growth of the global mobile point-of-sale (mPOS) market growth over the forecast period

It is crucial to build customer confidence and overcome the risks related to fraud. Currently, there is a need for enhanced security measures and although the players throughout the ecosystem of mPOS, such as hardware vendors and acquirers, have been adding multiple new security features, it still has not overcome the lack of confidence of consumers in making transactions through mPOS. Furthermore, mPOS handle critical information, which can be exposed to security breaches. Cyber espionage, point-of-sale intrusions, and web application attacks were some of the major security threats in 2013. POS intrusions were also a significant IT threat in 2013, accounting for 14% of total security breaches. Hence, these factors are expected to restrain growth of the global mobile point-of-sale (mPOS) market during the forecast period.

Technical challenges associated with mPOS are expected to hinder the global mobile point-of-sale (mPOS) market growth over the forecast period

There are various operational, technical, and regulatory challenges associated with the adoption of mPOS. Network connectivity remains a major concern with mPOS combined with battery and reliability of services. This problem would especially be persistent in areas far off from major cities. Therefore, these factors are expected to hinder the global mobile point-of-sale (mPOS) market growth in the near future.