What Is SoftPOS?

A SoftPOS solution is a mobile application that enables merchants to accept tap payments on their smartphones or mobile devices with near-field communication (NFC) capability. 

SoftPOS applications are the latest evolution in mobile payment acceptance. They take the convenience of mPOS payments to the next level by eliminating the need for specialized hardware and making secure, contactless payment acceptance more affordable and accessible. Because they’re generally device and processor-agnostic, SoftPOS apps ensure merchants can stick with the devices and processing partners they already use.

Here’s how SoftPOS apps work:

• First, the merchant enters the sale into the application on their phone or tablet
• Next, the customer taps their own contactless payment card, mobile device or wearable payment accessory directly on the merchant’s phone or tablet to complete the transaction
• The payment information is then transmitted via NFC and securely sent for authorization (working the same way as if the merchant’s phone was a traditional payments terminal) 
• Finally, the authorization or decline comes back as normal, and the merchant can issue a digital receipt via email or SMS

SoftPOS vs. mPOS: Which One Is Right for Your Merchants?

SoftPOS is still in its infancy, accounting for just a small fraction of all mobile-based POS systems currently in use. But SoftPOS could be the go-to choice for merchants by the end of the decade, thanks to an estimated compound annual growth rate of 22.3% from now to 2030. 

Today, early adopters who have made the switch enjoy some significant benefits in cost and convenience. But there are still advantages to mPOS solutions that make those the more popular choice — for now. The following are seven key areas to consider when choosing between SoftPOS and mPOS and why one might win out over the other, depending on a merchant’s business needs.

Hardware Costs and Requirements

The biggest benefit that draws small merchants to SoftPOS solutions is the ability to accept payments on devices they already own — no need to pay for or maintain additional hardware. That represents a potentially significant savings for small businesses, especially if they need multiple points of sale.

While mPOS solutions cost less than traditional desktop POSs, they’re still a two-part solution; they require specialized card reading hardware and a phone or tablet. A SoftPOS solution is purely software-based, using the built-in NFC capabilities of the smartphones (and some tablets) that merchants already have. For small and micro merchants, being able to repurpose personal devices is a huge advantage over even the lowest-cost mPOS hardware.

Winner: SoftPOS

Convenience

Once set up, SoftPOS is a simpler solution, with fewer points of failure. If a merchant can keep their phone charged and connected, they can keep their POS online. Because everyone is already so well versed in using their smartphones and navigating apps, opting for a SoftPOS flattens out the learning curve, boosting convenience further.

A SoftPOS system also enables merchants to sell anywhere without worrying about whether or not they have their card reader with them. That “any time, anywhere” aspect is especially convenient for merchants that sell regularly in the field.

Winner: SoftPOS

Flexibility

Both mPOS and SoftPOS systems enable merchants to sell anywhere, whether that’s somewhere else in the store or somewhere else in town. But each offers unique benefits and drawbacks in how they do it.

As mentioned, a SoftPOS can be used anywhere without needing a card reader, maximizing the options for when and where merchants can sell — if their phone or tablet has a stable data or wifi connection. But, if the internet is down or a signal isn’t available, SoftPOS systems generally don’t work offline. 

By comparison, many mPOS systems have offline capabilities that enable merchants to keep selling when the internet isn’t available and then sync everything up when it is. So, while a SoftPOS can go where it might not be convenient to carry a card reader, for now, an mPOS is a more reliable solution for merchants selling on the go or in more rural environments.

Winner: Tie

Customer Payment Choice

SoftPOS systems use the NFC technology built into mobile devices to enable customers to tap to pay. When the customer is using a contactless payment card or a digital wallet, a SoftPOS is an ideal solution. But, we’ve all had cards that randomly fail to tap or stop tapping altogether as they get older. With a SoftPOS, there is no chip reader, which means there is no option to dip if tapping fails.

Even the most compact plug-in mPOS solutions offer both NFC tap payments and dip payments. Some, like the BBPOS Chipper and ID TECH VP3350, even offer a magstripe reader for old-school swipe payments. That ability to offer tap, dip and swipe means mPOS solutions provide end customers with more options and ensure paying is never disrupted by a finicky NFC chip.

Winner: mPOS

Customer Perception

The beauty of a SoftPOS payment is that it takes place right on a merchant’s smart device. But that can also be one of the downsides; some customers don’t love the idea of tapping their credit card on someone’s phone. That comes down to two things: the perception of transaction security and the perception of professionalism. 

Merchants that choose a SoftPOS solution need to be ready to explain it to customers and bear with their occasional nervous glances — at least until adoption spreads and consumers become more familiar with the technology. In the meantime, merchants looking for a mobile solution that looks and feels more like a traditional payment are probably better served by an mPOS.

Winner: mPOS

Security

While some customers may perceive SoftPOS payments as being less secure than mPOS, in reality, they’re both fully secure. Both SoftPOS and mPOS payments have to adhere to the stringent data protection requirements of the Payment Card Industry Data Security Standard (PCI DSS). Both use advanced encryption, both can use next-level security like network tokenization, and both have security built into the systems themselves. In the case of SoftPOS, they have the built-in security features of Android and Apple operating systems. 

In short, merchants and customers can trust a SoftPOS just as much as an mPOS or desktop POS. SoftPOS just needs more exposure to overcome the initial hesitation of using a smartphone or tablet for something we’re not accustomed to.

Winner: Tie

Scalability

When it comes to scaling up as a merchant grows, neither mPOS nor SoftPOS has a significant advantage as of today. In terms of equipping multiple staff members across multiple stores with a mobile POS, it might seem like SoftPOS has a major advantage since it requires no specialized hardware. 

However, even if a merchant goes fully SoftPOS, like the Apple Store with its Tap to Pay on iPhone, they generally won’t want their employees using personal devices, which means they’ll need to buy phones or tablets. With an mPOS, they can connect multiple wireless readers to a single phone or tablet.

In either case, once a merchant starts scaling up across multiple checkouts and locations, they’ll be purchasing roughly the same amount of hardware, and both solutions will work equally well.

Winner: Tie

Should You Offer SoftPOS Payments?

As of today, mPOS is still the go-to mobile choice for most merchants, but that probably won’t last. As more merchants become familiar with the benefits of SoftPOS solutions, and more customers get used to paying on them, we’ll eventually reach a point where SoftPOS demand flips mPOS demand. While that’s likely years away, SoftPOS adoption is still undergoing strong growth, and offering it to your merchants is a key part of providing a complete set of payment services.

In addition to our mPOS hardware, NMI is one of the first payment platforms to offer Mastercard’s tap-to-pay SoftPOS solution. With NMI as your technology partner, you can offer your merchants all the secure, convenient and cost-effective mobile payment solutions they need, regardless of what, where or how they sell.

To learn more about NMI SoftPOS and mPOS solutions and our complete suite of payments hardware, reach out to a member of our team today.