mPOS payments: Enabler of cost savings and efficiencies

Missing the target

The popularity and hype around Square, the US-based company that first launched an mPOS dongle in 2009 targeting micro-merchants and small businesses, has led many mPOS players around the world to target the same audience with similar solutions and through similar distribution channels. In the absence of any tangible differentiation, some banks have evaluated mPOS players based almost exclusively on pricing and made it challenging for some of them to have a sustainable distribution partnership.

Unfavorable operating model

In a game of scale and volumes, a profitable mPOS distribution partnership requires that both parties have ‘skin in the game’. Signing a deal without commitments – in terms of sales targets and marketing spend – is the same as putting a product on a shelf and wait for someone, actually anyone, to notice it and hopefully buy it. Ideally, both partners should play an active role in the parts of the value-chain where they are strongest and can add the most value. Firstly, banks should push sales through the branches and assess the risk of new-to-bank merchants. Secondly, mPOS solution providers should make it frictionless for banks to integrate their white label solution, ensure merchant on-boarding is fast and smooth, and transactions are secure and reliable.

Enabling cost savings and efficiencies through mPOS

In this context, since mPOS has shown relative appeal to small merchants outside of developed markets such as the USA, it may have a wider application in the enterprise mobility space. For enterprises, mPOS can become the enabler for cost savings, improved efficiencies, and better customer experience. mPOS is therefore not only a solution to the narrow problem of allowing small merchants to accept plastics but also an enabler to address pain points common to many large corporates, almost irrespective of the industry in which they operate:

• Retailers can use mPOS to bust lines at check-out but also to improve the customer experience;
• Distributors of food and beverages can displace cash-on-delivery with card payments and reduce expensive cash handling costs while improving accounts receivables automation and reducing DSO, day-sales-outstanding;
• Insurance companies can collect premium payments as soon as the customer agrees to sign up for a new product reaching the double objective of improving sales efficiency through high conversion rates and, again, improving accounts receivable through invoices and payment reconciliation automation.

mPOS has been so far relegated mostly to being a smart, smaller, and sometimes cheaper Point-of-Sale device for SMEs. mPOS is more than that and the examples above are just a few of the potential applications where it can become an enabler of savings and efficiencies for large corporates as well.

Note from Huiyi, TIA’s community manager:
All content provided on this blog is for informational purposes only. The opinions and views expressed on this blog are author’s own and do not in any way represent the opinions and views of his current or previous employers. 🙂