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Indian POS Terminal Market to Worth $450 million by 2024

ram@justransact.com 2018-09-08 13:41:00

Demonitization by the Indian government in November 2016 has actually triggered new opportunities for cash-less transaction market which in-turn made companies venturing into POS terminal business in a big way.

 

If experts from global analytical wing of Beige Market Intelligence are to be believed, in just about two years, Indian POS terminal  market is growing almost in sync with the global counterparts and is expected to grow at CAGR of 10% in the next six years.

 

According to a recent survey, the global POS terminal market will grow at a CAGR of 12.53% during 2016–2022 with the help of the high-momentum growth being experiencing by India since 2016.

 

Indian POS terminal market will worth $450 Mn growing at faster than expected CAGR of over 10% from 2017 to 2024 due to new-found opportunities experienced by local Point of Sales (POS) and Mobile Point of Sale (mPOS) enterprises due to patronages given by the government for cash-less transaction activities.

 

What is POS?

 

The Point of Purchase or Point of Sale is the place or time where the actual retail transaction takes place that is a buyer pays to vendor for the goods or services. Since moneyless transactions have picked momentum across world, a digital POS is typically a system where a vendor gets payments from customers through credit/debit cards through a swipe. With improvement in technology, POS companies have integrated hosts of applications such as billing, barcode scanning, inventory tracking, CRM, sales, accounts, etc in a single system at POS counters which also accepts payments through different channels – cash, card, wallets, mobile, contactless, cheques, coupons, etc.

 

 

POS is a booming market globally, but the contribution from India is phenomenal. It was the demonetisation in India in November 2016 that opened series of opportunities in this segment, also bringing VC attention and investments.

 

 

Inc42 DataLabs,  a leading Research and reports analyst on the Indian tech & startup ecosystem, has recently said that Indian digital POS terminal startups have so far raised a total of $406 Mn funding with some of the prominent POS terminal providers including Mswipe, Pine Labs, Payswiff (earlier known as Paynear), Ezetap, Mosambee, Innoviti, among others.

 

 

With highest funding of $227 Mn, Pine Labs stands atop having secured more than half the amount ($125 Mn) in this financial year itself.

 

 

POS service providers operate on one single principle — providing hassle-free payment eco-system to merchants though they may have different monetisation models which depend on individual target markets. Investors show increased interest in this sector as they see the possibility of sustainable returns and low-risk business model.

 

 

 

Challenges and Opportunities

 

POS terminal sector is currently witnessing stiff competition among mobile wallet companies like MobiKwik, Paytm and Unified Payments Interface (UPI)-based solutions. Though UPI and mobile wallets offer only payment solutions to retail vendors, even a basic POS can provide a wide combination of payment modes (credit and credit cards, cash, cheques, wallets, coupons, etc) along with analytics, billing, inventory management, customer management, thereby improving the overall efficiency of a retailer.

 

The growth of POS players in India is further triggered by the presence of technology-enhanced security and reduced customer wait times.

 

One of the major challenges is low margin per transaction as the digital payment industry is at the nascent stage. Also, issues hindering the growth of POS players in semi-urban and rural India are poor network connectivity, lack of infrastructure and low credit/debit card penetration.

 

On the positive side, the increase in numbers of virtual POS devices, acceptance of new-age technologies, including UPI, QR code-based payments, and different settlement mechanisms, have opened doors of Indian POS firms to overseas markets. Companies such as Innoviti Payments, Ezetap and Pine Labs among others are already making forays in cross-border markets.

 

With so many players jostling for space in the POS terminal market, will Mswipe, Ezetap, Payswiff or Mosambee be able to make the brick-and-mortar retailers swipe more to enter the profitability club like Pine Labs? Only time will tell.

-K RAMANATHAN   ram@justransact.com

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