The first quarter of 2022 has been rather eventful within the SoftPOS space. In January, PCI has announced a 30-day request for comments (RFC) period for the new Mobile Payments on COTS (MPoC) standard inviting its Mobile Taskforce members as well as PCI-Recognized Laboratories to provide feedback on the standard. Following this, in February, Apple unveiled its new service Tap to Pay on iPhone intending to allow merchants in the US to accept NFC payments on their iPhones later this year.
Both announcements mark significant milestones for the in-store payments industry, shaping the future of software-based payment acceptance. We’re going to try and unpack this in a little more detail.
The upcoming PCI MPoC standard
Let’s start with the PCI MPoC standard and why it is so important and greatly anticipated by the industry. As we all know, traditional payment terminals have been equipped with a PIN pad for decades as it adds another layer of security. Of course, since the majority of card-present payments are contactless nowadays we are no longer required to enter a PIN as often due to higher contactless payment limits or in the case of using digital wallets (e.g. Google Pay or Apple Pay) where cardholder verification is performed on the cardholders’ device. However, when it comes to payments using contactless cards, there are still several scenarios when a PIN is required, for example, high-value payments (payments above £100 in the UK or €50 in most EU countries) or when a Contactless limit counter – cumulative amount or number of Contactless payments – is reached. As long as many consumers still rely on contactless cards, it is clear that PIN entry must be supported by Software POS solutions that aim to provide merchants with an alternative way to accept contactless payments, especially if SoftPOS is the only tool in their arsenal.
This is where the PCI MPoC standard comes in. Among many other exciting things, it will enable MPoC certified apps to accept payments where a PIN entry is required. On top of that, the standard will provide more flexibility for developers to collaborate due to the modular certification approach that will be introduced by the MPoC standard. As a result, the PCI MPoC standard will no doubt remove some of the barriers for market entry and increase trust within the payments industry for software-based payment solutions in general. After all, PCI SSC is one of the most well-known standardization bodies within the payments industry and by writing a standard dedicated to Software POS, they are effectively placing their seal of approval for the existence and future growth of such solutions.
The arrival of Apple in the SoftPOS space
Moving onto Apple’s announcement of Tap to Pay on iPhone. While most industry experts already saw this move coming, it’s nonetheless a significant milestone for the industry. First of all, Apple iPhone continues to be a leader when it comes to smartphone market share therefore it’s important for the industry as a whole that software-based payments are not limited to the Android platform. Next to that, Apple iPhones are perceived to be highly secure and trusted by consumers globally, making them an excellent marketing tool to normalize this rather new and at times alien concept of accepting NFC payments on consumer-grade devices. Looking back to 2014, Apple Pay gave arguably the biggest push for the adoption of digital wallets back then, even though a similar concept was already available on Android devices. In addition to this, Apple hinted at a possibility of a more open ecosystem where third party developers could use Tap to Pay on iPhone to develop their own end-to-end solutions.
So with the two announcements linked together, the future of software-based payments is starting to look more and more promising. On one side we have the seal of approval from the regulators creating a much-needed framework and standardization for the mass adoption of the technology, and on the other side, we have a tech giant that buys into the new trend, giving the technology an additional spotlight and endorsement. Furthermore, with the modularity of PCI MPoC standard and a somewhat (hopefully) open ecosystem on the IOS platform, merchant service providers will have an opportunity to equip their merchants with in-expensive yet tailored and fit-for-purpose payment solutions, no matter the size, vertical or nature of the merchant’s business.