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Consumer preference is shifting towards electronic payment systems. A growing emphasis of governments across the globe towards a cashless economy will primarily drive the retail POS terminal market expansion in the forthcoming years.

Reportedly, the global non-cash transactions increased about 14% between 2018 and 2019 to reach 708.5 billion transactions. In which the volume of cashless transactions in the Asia Pacific accounted for 243.6 billion in 2019. A surging number of non-cash transactions globally will complement the high adoption of POS terminals across retail shops.

According to a Global Market Insights, Inc., analysis report, global retail POS terminals market size is estimated to surpass US$45 billion by 2026. Below mentioned are some key aspects of a cashless payment system driving its demand among customers.

Growing preference for electronic payment cards

High usage of alternative forms of physical currency such as electronic payment cards, which includes ATM, debit, and credit cards would positively influence movements of cashless economy in the Asia Pacific and Europe region. Cash-based transactions have certain disadvantages and inconveniences, mainly in terms of security, irregularity in counting, and others.

On the other hand, retail POS terminals render advantages such as swift purchase transaction, consistent pricing, high reliability & durability, and others, as compared with other traditional payment systems. On account of such benefits, POS terminals have been increasingly deployed across small and medium-sized retail stores.

mPOS terminals in out-of-store transaction

The mPOS terminal segment is expected to witness considerable growth in the upcoming years, due to its mobility and ability to provide secure transactions in out-of-store environment. The product is widely utilized in local retail shops, flea markets, events, and tradeshows to easily process a large amount of sales transactions and reduce transactional time.

The escalating security concerns pertaining to data privacy due to the rising incidences of cyberattacks will impede the retail POS terminals industry growth to some extent. Also, the high cost of deploying these systems on a large scale could slow down its adoption rate in retail shops.

Software applications in POS terminals

The software segment in the retail POS terminals industry is projected to grow significantly by 2026. The software used in POS terminals stores transactional records of consumers which further helps in monitoring their buying behavior and shopping trends.

These features further aid retailers in enhancing customer experience and escalate sales. Additionally, the integration of sophisticated technologies including the Internet of Things and advanced security software protects the crucial data of consumers.

Robust demand in supermarkets

The hypermarkets and supermarkets segment will expand exponentially in the forthcoming years owing to the presence of a well-organized retail sector across the globe. The introduction of customized POS terminals provide real-time dashboard options and detailed users’ profile. It helps in classifying their preferences and brings more value to the customers. These features also enable large-scale retailers to organize their workflow and propel sales and profits.

Growing cashless economies across APAC

The Asia Pacific retail POS terminals industry is expected to experience substantial growth trends owing to the evolving retail sector in countries like India and China. The recent economic reforms in India such as demonetization have tremendously boosted consumer preference towards cashless transactions. The regional manufacturers are emphasizing on introducing QR code-enabled devices to accept payment through other cashless mediums, which will eventually complement the regional industry landscape in the upcoming years.

PAX Technology, NCR Corporation, NEC Corporation, Ingenico SA, and VeriFone Systems, are the prominent companies functioning in the global retail POS terminals industry. The industry expansion is majorly attributed to the growing demand for technologically advanced systems offering features like gathering customer information, payroll data, and inventory management.

The integration of highly secured software and other advanced technologies in retail POS terminals and the government support to encourage the utilization of electronic payment systems will positively impact the industry growth.

Going Cashless During COVID-19

When we originally published this article in November 2018 during holiday shopping season, we could not have foreseen that a global health crisis would accelerate cashless payments worldwide. But new precautions in place due to COVID-19 have propelled us faster in the direction of contactless transactions everywhere.

Transmission of the disease from handling banknotes has consumers concerned, but the risk is reported to be low compared with touching credit card terminals and PIN pads. Yet the plexiglass that divides customer from cashier urges less reliance on bills and coins in favor of using point of sale machines to swipe your credit card.

Central banks around the world are taking steps to quarantine and sterilize banknotes to promote retained trust and universal acceptance of cash. Even so, many financial industry analysts are predicting that truly contactless payments through mobile e-wallets may be upon us sooner than previously forecast as consumers and retailers become more accustomed to eschewing cash.

Mobile Payments are the Future

According to Statista, 259 million Americans routinely bought products online in 2018.

That wasn’t the case just a few years ago when many of us were hesitant to punch in our credit card numbers to a website. But as ever more business is transacted online, financial services and “fintech” companies have built and continue to improve a secure payments ecosystem that consumers and businesses can be confident will protect their most vital assets: their private information and money.

Pretty soon we might not need to pull out a physical card as our credit card information gets linked with mobile payment systems. All you need is your finger, your phone, or a watch – items you probably already have on hand, literally. As more consumers adopt this convenience, “e-wallets” will eventually replace cash altogether.

The United States and Emerging Markets Lead

Mobile payments in the United States, China, Russia and India are driving the global trend – the United States by sheer volume of cashless transactions and the big emerging markets by virtue of how fast they are growing. In 2017, non-cash transactions grew 34.6 percent in China, 38.5 percent in Russia, and 38.5 percent in India.

Russia’s surge owes to the Central Bank of Russia’s implementation of a National Payment Card System that boosted growth of cashless transactions by 36.5 percent after it was introduced in 2015-2016. AliPay and WeChat Pay are keeping China on a sustained upward trajectory. Mobile payments in China climbed from $2 trillion in 2015 to $15.4 trillion in 2017, an amount greater than the combined total of the global transactions processed by Visa and Mastercard. India has improved its regulatory environment for digital payments as smartphone penetration expands.

Growth of global cashless transactions

Leapfrogging in Developing Countries

According to the 2019 World Payments Report, developing markets as a group contributed 35 percent of all non-cash transactions in 2017 and are close to reaching half of all non-cash transactions if they maintain the current rate.

Financial inclusion initiatives in developing countries that are designed to pull citizens into the formal banking system combined with an increase of mobile phone ownership means developing countries are leapfrogging over credit card use, going from cash to mobile payments.

Remittances, which comprise a high percentage of GDP in many developing countries, are being facilitated increasingly through person-to-person mobile money transfers. In one example, Western Union and Safaricom, a mobile provider in Kenya, have teamed to enable 28 million mobile wallet holders to send money to family and others over Western Union’s global network.

The Global Mobile Industry Association predicts the number of smartphones in use in sub-Saharan Africa will nearly double by 2025, enabling previously “unbanked” individuals to send and receive money by phone. For merchants in developing countries, scanning a QR code on a phone is faster and cheaper than installing point-of-service terminals that require a continuous electrical supply for reliability.

Developing countries will account for half of cashless transactions soon.

Mobile People with Mobile Phones

Chinese tourists are also driving global proliferation of mobile payments as vendors work to accommodate Chinese travelers in airports, restaurants, hotels, and stores. China’s Alipay advertised popular “outbound destinations without wallets” for Golden Week, when millions of Chinese go on vacation. Last year, prior to travel restrictions, there was a boom in Chinese tourists to Japan, with over 9.5 million visitors in 2019. China’s WeChat Pay teamed with Line, Japan’s popular messaging app service to offer mobile payments to Japanese retailers seeking to accommodate the influx of Chinese tourists. WeChat’s rival, Alipay, is also partnering to extend services in Japan.

Global Standards and Interoperability are Needed

Through national financial inclusion programs, a steep increase in the accessibility of mobile phones, and with trade driving more global business transactions online, a cashless global economy could be in our future.

What’s standing in the way of faster integration globally of mobile payments, however, is a lack of international standards and common approaches to security, data privacy, and prevention of cybercrimes.

Companies in this space are continually evolving layers of protections such as the chips on your credit cards, encryption, tokens, and biometrics to stay ahead of cybercriminals, but it’s a constant battle against fraud and hacking of personal account information. For example, tokenization is a technology that safeguards bank details in mobile payment apps. That’s how Apple Pay works – rather than directly using your credit card details, your bank or credit card network generates random numbers that Apple programs into your phone, masking valuable information from hackers.

Differing national regulatory approaches to data authorization and distributed ledger technology (like blockchain) could fragment markets and inhibit adoption of the underlying technologies that permit mobile payments. Industry groups say international standards should be modernized to reflect technological innovations, but also harmonized to avoid developing different payments systems for different markets.

Interoperability is then the cornerstone of expanding trade through global digital payments. Groups like the PCI Security Standards Council advocate for international cooperation not only to set standards for ease of consumer use but because no single private company or government can stay continually ahead of hackers. They say that sharing information and best practices can raise everyone’s game, prevent attacks, and disseminate alerts quickly to stop the spread of damage when an attack occurs.

Mobile Payments Slim My Wallet in More Ways Than One

By 2023, there will be three times as many connected devices in the world as there are people on Earth. (And that prediction was made pre-pandemic.) Young people with new spending power are favorably disposed to cashless transactions and shopping through their devices. Mobile payments help connect poorer and rural citizens to the formal economy just through SMS texts. Even tourism is spreading a culture of mobile payments. And many brick and mortar retailers say online browsing can drive in-store sales and help the bottom line.

Small businesses are making great use of mobile payment readers to take payments anywhere on the go, from selling jam at farmers markets to selling band t-shirts at small music venues. Business executives surveyed in the World Payments Report also cite increasing use of such rapid transfer payments to speed the settlement of business-to-business invoices and for supply chain financing, particularly across borders.

Experts are realistic, however, that cash isn’t dead yet. In most countries, cash payments as a share of total payment volume is declining, but cash in circulation is stable or rising – and that seems to be holding true despite the pandemic.

For a little while anyway, I conserved both cash and mobile spending during the pandemic. I’m back to routinely overspending at Starbucks where my thumb is all it takes to reload the card on the app using a preloaded credit card. If my behavior is any indication, the ease of mobile payments will probably cause many of us to spend more as the cash doesn’t have to physically leave the grip of our hands. The increase in availability and accessibility of cashless, mobile payments will be good for economic recovery and good for global trade.

Editor’s Note: This post was originally published in November 2018 and has been updated for accuracy and comprehensiveness.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

5 Notable Trends Driving Global Retail POS Terminals Market Forecast