Digital payments in India continue to surge, largely aided by the increasing dominance of UPI (unified payments interface) payments. SoftPOS could well be the next big driver of this growth.
Data from payment services provider Worldline shows UPI transaction volume jumped 42 per cent from a year ago to 93.23 billion transactions in the second half of 2024, while transaction value also grew 31 per cent to Rs 130.19 trillion.
As UPI payments continue to gain rapid traction, the adoption of QR codes too more than doubled to 633.4 million and mobile payments accelerated 41 per cent to 88.54 billion.
Apart from convenience, a key reason behind the continued surge in UPI payment is that it is completely free for users. While UPI now dominates, credit cards also continue to gain traction. In the second half of 2024, credit card transaction volumes rose 36 per cent to 2.43 billion, while value also gained over 14 per cent to Rs 10.76 trillion.
The number of POS (point of sale) terminals in India have now crossed 10 million, while its deployment has risen 23 per cent from a year ago. What could well be the next game changer is SoftPOS or more broadly software point of sale.
What is SoftPOS?
It is the technology that transforms your ordinary smartphone, which has NFC enabled into a POS machine. Essentially, a merchant installs an app on the smartphone. This then allows her to use the smartphone like a POS machine. Customers simply tap their contactless cards on that phone to make payments, just like they would tap their cards on a physical POS machine.
SoftPOS does away with the need for a merchant to invest in POS machine. This has been gaining traction in many markets. Payments giant Visa had stated in March that adoption of its tap-to-phone solution had tripled over the past year. In the highest tap to phone countries—US, UK and Brazil—adoption rates have shown a combined growth rate of 234 per cent, it had said.
In a developing market like India, which is dominated by micro and small enterprises and merchants, this affordable solution that does away with the need to invest in a POS machine, could find even wider acceptance.
"Merchants are increasingly recognizing the advantages of SoftPOS, particularly its potential to deliver substantial cost savings by removing the need for purchasing and maintaining expensive traditional POS terminals, thereby improving their operational efficiency," said Sunil Rongala, senior vice-president - strategy, innovation and analytics at Worldline.
SoftPOS is predicted to grow at a compounded annual growth rate of 17.6 per cent between 2025-2037. The Mobile Payments on Commercial off-the-shelf (MPoC) standard enhances security by supporting the entry of card pin directly on the mobile phone screens, thus also enabling high value purchases that typically require authentication via a pin.
"This technology is also particularly appealing to mobile businesses and service providers who require payment acceptance on the go, as well as for merchants in developing economies where traditional payment infrastructure may be less accessible," said Rongala.