Holland’s ING Bank is testing a new software application that turns a smartphone into a point-of-sale (POS) device, without the need for any additional hardware.
The trials are being conducted alongside Mastercard. They are using a POS software system developed by Istanbul-based software developers Provision
Using the SoftPos application, small retailers and outdoor merchants will be able to use their mobile device to process card payments. While payments are currently limited to the CVM (contactless) limit, Provision says it hopes to expand the amount the application can accept by using PIN on glass or other technologies.
Provision’s SoftPos application uses near-field communication (NFC) technology, via which customers can simply tap their cards on the merchant’s device to complete a transaction. Any Android device that has NFC functionality can be used.
If rolled out more broadly, the application could prove disruptive to a burgeoning POS hardware and software market: iZettle, for example, best known for introducing the world’s first mobile attachment capable of accepting EMV chip-embedded credit cards, was bought by Paypal for for $2.2 billion (£1.6 billion) last year.
SoftPos Application Could Help Reduce Black Market
Mastercard suggests the application would help bring further numbers of unbanked and/or cash-centric traders into the financial system, saying its use would “lead to reduction in grey economy and eliminate the risk of cash loss.” (In Turkey alone an estimate 1.5 million business and vendors take cash only.)
NFC works by creating a magnetic field that expands across the space between devices or NFC tags. Within this field radio waves communicate between the devices, NFC operates at the 13.56MHz radiofrequency spectrum. The technology is consider somewhat secure due to the proximity that devices need to be in to complete the NFC relay, as they often will need to be within 4cm to successfully communicate.