Global tech giants including Apple are turning smartphones into app-enabled Point of Sale devices to disrupt a $65 billion global industry.
Banks need to consider the potential growth unlocked by supporting services such as Apple Tap to Pay along with the risks involved in not competing, as disruptive fintechs could secure long-term relationships with merchants who adopt any new service.
Smartphone-based POS may be particularly attractive to start-ups or those yet to invest in a POS system. The world economy is expected to grow by $3 trillion during 2022 and much of that growth will come from SMEs, which represent around 90% of global businesses. The pandemic has also accelerated the shift to card payments.
However, the questions facing banks expand beyond new products; they encompass the vision banks have for their role in the coming decade.
Does the future lie in competing directly for business, which will need rapid innovation across the payments ecosystem to create integrated services and platforms that meet a range of key customer needs in one place? Or do banks see themselves being integrated with another business’s innovative apps and platforms to deliver embedded finance solutions wherever the customer need arises?
This key question will frame discussion about the specific challenge of how to respond to developments in the POS market.