How mobile technology is shaking up the payments industry

We already use mobile phones for a wide range of tasks, from playing games to booking holidays, arranging dates to making videos. However, very soon, we will also be using our mobiles in shops, cafés and taxis to pay for, and accept payments for, various goods and services.

The simplicity and intuitiveness of mobile payments is a major reason why more and more small to medium sized business are taking advantage of this new technology. Mobile point-of-sale (mPOS) is such a game-changer because our smartphones and tablet devices already contain within them the core technology required to accept credit and debit card payments.

By combining these everyday devices with an app and a card reader, almost anyone can begin to accept card payments.

Due to this ease of use, mPOS is growing fast and as a result, companies such as SumUp are proving a disruptive force in established payments industries. This isn't just hyperbole. According to Gartner, the value of global mobile payment transactions will be £146.3 billion in 2013, up 44 per cent from 2012. As the mobile payments market continues to grow, the more established companies in this field will find their market share shrinking.

Traditional card terminal manufacturers are seeing profit margins squeezed by the affordability and convenience which mPOS technology offers. Traditional card acceptance units are not only static but the contracts are usually quite rigid. Merchants often have to pay high rental fees for a minimum of 12 or 24 months.

mPOS providers are capitalising on this lack of flexibility by providing a more attractive deal for small and medium businesses. The contracts mPOS companies offer tend to be very flexible, appealing to seasonal operators, pop-ups and merchants on the go.

The waves of disruption created by mPOS companies go further than card terminal manufacturers. mPOS companies are also changing the point-of-sale hardware industry. Smartphones and tablets, when combined with an app, contain the core tech required for users to have a cash register interface on their screen.

Coupled with a cash drawer and receipt printer, something some mPOS companies are already offering, the merchant has all the hardware he or she needs to set up shop.

This whole package has the potential to save merchants hundreds or even thousands of pounds each year. For small to medium sized businesses seeking to move away from only accepting cash payments or from dealing with the hassles of traditional tills, the mPOS solution is increasingly becoming an attractive and affordable all-in-one package.

Hardware aside, some mPOS, including SumUp, are now approved by the Financial Conduct Authority (FCA). This means that they can, in effect, act as acquiring banks. By cutting out the middle man, complex paperwork could soon be a thing of the past. This benefits merchants and business owners and also makes the on-boarding process highly scalable.

It also allows respective mPOS companies to take on tens of thousands of merchants per month, providing them with all they need to be able to accept card payments and run and grow their business.

As retailers become more aware of the benefits, and subsequently adopt mPOS systems, the established payments industry will be further disrupted. Unless the traditional players up their game within the next few years or so, they could find themselves out of business.

Either way, how we make and take card payments is already changing forever.

Stefan Jeschonnek is the co-founder and product lead of SumUp, a vendor of mobile point-of-sale technology.

Image: Flickr (joe.ross)