What you need to know about SoftPOS

At a glance: 

• Tap on phone technology, which allows micro and small businesses to take payments without additional hardware, is referred to as SoftPOS or Software Point of Sale.
• SoftPOS may increase turnover and lower costs for merchants, and offer greater convenience to customers.
• Currently only micro and small businesses with Android mobile devices are able to take advantage of the two established offerings in the UK.

Smartphones are now embedded in everyday life and, increasingly, in payment systems.

Nearly a third of adults were registered for at least one mobile payments service in 2021 and 92 per cent used the services to make payments during the year, according to UK Finance, a trade association for the banking and financial services sector.

Consumers are familiar with tap to pay methods, for example via mobile wallets such as Apple Pay and Google Pay.

Now, tap on phone or tap to phone is likely to further revolutionise the way micro and small businesses including independent consultants, delivery couriers, food trucks and many other mobile workers can take payments, saving time and costs, and potentially improving cash flow.

This new technology is referred to as SoftPOS (Software Point of Sale) – it’s a software-based solution that allows a smartphone to accept payment without any additional hardware such as a card reader.

New research suggests that the number of businesses using SoftPOS technology will climb to more than 34.5 million globally in the next four years.

However, rollout and adoption of this technology is significantly slower in the UK than in the United States, for example, with only two apps in the UK – Viva Wallet and myPOS Glass – firmly established.

How SoftPOS works

Tap on phone payments allow a micro or small business to use their smartphone to accept payments from customers’ credit cards or mobile wallets, provided both are using devices enabled for near-field communication (NFC).

No additional hardware, such as an Eftpos machine or a Square Reader, is required.

That said, clients still need to enter a payment processing contract with a provider, after which they gain access to the software needed and are able to download the payment app.

The advantages of tap to phone payments for micro and small businesses

Offering tap to pay means a micro or small businesses can take payments faster than conventional payment methods, potentially increasing turnover and convenience.

There’s also the savings on traditional POS terminals for those businesses that are already using compatible devices, and fees generally only apply when the apps are used.

This may be a significant saving to a client who runs a small café, or sells products at local markets, for example.

While due diligence around particular providers is of course an important step prior to adoption, these new types of transactions are generally protected by the same security and encryption technology as EMV chip cards, and use the same secure transaction processes as other point-of-sale transactions.

Barriers to acceptance of tap on phone payments

Both Viva Wallet and MyPOS Glass are only available on Android phones. This means the business’s device must be an Android device (the customer who is making the payment can still pay with a physical card, Apple Pay and so on), which is likely a current brake on adoption.

However, analysts predict that once Apple enables third parties to develop SoftPOS solutions, an influx of iOS-specific services will emerge.

In a sign of how this may roll out locally, Apple introduced tap to pay on iPhone in Australia in May, and started with one of Australia’s big four banks Westpac and Eftpos provider Tyro Payments as the first platforms to offer it to business partners.

Awareness of the new technology is likely to become less of a barrier once Apple is on board, but trust issues may remain.

Analysts at leading global professional services company Accenture say that for tap on phone to be widely used, trust issues that often accompany new technology will need to be overcome.

Older and, potentially, less tech-savvy clients may continue to prefer more traditional methods of payment in the immediate future, but UK Finance predicts that, in the next 10 years, they will catch younger age groups in adoption.

Under the hood: Tap on phone apps

Viva Wallet

Offered by a European payments and e-money institution, Viva Wallet POS app is available on Android phone and tablets only.

Clients sign up for a free Viva Wallet Business Account, download the Viva Wallet POS app from Google Play on their mobile device and start accepting payments, with transactions settled in their account the next day.

The charge per transaction is 1.16%, which a micro or small business may decide to pass on to the customer.

Viva’s Terminal App can also be used by cafés or shops or even delivery services, for example, who want to allow their staff to accept card payments on the move.

Every employee can, at the end of their work period, close their shift through their smartphone.

My POS Glass

myPOS Glass, from European fintech provider myPOS, allows businesses to accept payments via cards, mobile wallets and NFC wearable devices on their Android phone.

To get started, it’s a matter of creating a business account through the website then downloading the app.

Payouts go into an online myPOS account instantly.

With myPos Glass it’s also possible to show products on a phone, keep track of digital and cash sales and maintain and manage product lists.

Transactions costs range from 1.10% to 1.6% plus card cost of seven pence.