According to a report by IHL Group, 33% of retailers in North America have no plans to adopt mobile point-of-sale systems any time soon, suggesting a drop in interest compared to last year. The biggest concerns over adopting mobile POS include device and merchandise security, payment handling, and the complications with reworking customer service and traffic flow. Given this trend, it looks like Jack Dorsey's move into Japan and further plans for global expansion is in the right direction since mPOS in Asia is still in its nascent stages and has yet to see a single dominant player in any market.
However, the report reveals that the adoption rate for mobile POS is dependent on the type of retailer and volume of transactions, with specialty retailers having the greatest demand for implementing mPOS, accounting for 45% of all tablets shipped to retail for POS. Retailers with higher volume transaction environments such as grocery, warehouse clubs, super centers, drug stores, and convenience stores are finding mobile POS less effective, and if implemented, would serve as additional transaction points rather than as replacements for traditional POS systems. That means we're less likely to see other large retail chains with high-volume transactions like Starbucks implementing mPOS systems any time soon, a partnership that has not been going too smoothly anyway.
Although IHL Group's report suggests a slow down in merchant demand, the number of mPOS suppliers has been steadily increasing, not just in North America, but around the world. This will soon lead to commoditization of the mPOS market, with larger players potentially using their resources to undercut smaller rivals on price points, leading to an inevitable drop in the overall number of players.
Though Square has begun to dip its feet into the Asian market in search of bigger market opportunities, it faces a high level of competition, from Asian-born start-ups to European vendors who moved quickly to fill the square-shaped gap in Asia. (We've compiled a guide to the many rivals that Square will have in Asia which you can download for free here.)
Furthermore, being non-EMV compliant further puts Square at a disadvantage among existing market players. Thus, Square will have to look to other ways to differentiate itself.
Given the slow-down in mPOS demand in North America, do you think it was a good idea for Square to expand to Asia instead? Share your thoughts with us in the comments below.