Payment System: Innovations like BNPL via POS have led to greater collaboration between fintechs, banks, NBFCs & payment networks

POS devices are fast evolving and coming to some exciting everyday uses, and helping merchants manage their store operations efficiently.

By Nitish Asthana

For India’s small and medium-sized businesses, cash has traditionally been the favoured mode of accepting payments. The perceived cost factor around the point of sale (POS) terminals has been a key barrier to the adoption of digital payments in India. The year 2020 brought in a fresh perspective.

Fintech innovations that we are witnessing today are expected to further obliterate the digital divide. POS has emerged as the new OS that is driving growth for India’s kirana stores, mom and pop shops, and other businesses, making them embrace digital payments in a big way.

For the longest time, small and medium business owners in India believed POS devices helped them in only accepting payments. Modern-day POS technology empowers these merchants to offer Pay Later EMIs in few taps of the device and convert that casual store walk-in customer into a sale. Much needed in times like today when merchants are looking for ways to woo customers back to their stores after a prolonged period of lockdown.

POS devices are fast evolving and coming to some exciting everyday uses, and helping merchants manage their store operations efficiently. From inventory management, managing loyalty programs, to running promotional campaigns and even supporting their GST compliance needs. Smart tech integrations like business apps on POS are making it possible to make the POS a full-fledged OS that declutters the checkout counter and makes a single device perform multiple functions with ease.

POS is evolving with the changing consumer behaviour. Today, there is no single preferred mode of payment for India as a whole. With so many digital payment options, the Gen-Zers, millennials, and the older population each prefer their own way of checking out from a store. Be it a quick ‘tap and pay’ of the credit/debit card on the POS for contactless payments up to Rs 5,000/- to using UPI, wallets, QR codes and even loyalty points.

Offering affordability to customers: The pandemic reduced footfall and decreased sales for many local merchants, but the Buy Now Pay Later (BNPL) EMI offers available at offline stores via POS are turning out to be a potent tool for small and medium businesses to revive sales. While BNPL helped consumers make small-ticket purchases, it has also found traction in driving the purchase of white goods and other big-ticket items.

Making it a win-win ecosystem for all: Fintech innovations like BNPL via POS have led to greater collaboration between fintechs, banks and NBFCs, and even payment networks. Modern POS devices are offering new and innovative ways for consumers to decide how they shop and how they pay, and at the same time, it is empowering merchants, banks, and other lenders to join the growing trend of consumer financing at the point of sale. There is a major uptick in the BNPL offering via POS devices, and the trend is here to stay.

A 2020 report by Nielsen and the IAMAI reveals that rural India had around 227 million active internet users—around 10% more than the 205 million internet users in urban India. Increasing smartphone penetration coupled with internet expansion in smaller cities is accelerating digital payments adoption by merchants.

Amid this rapid adoption of digital payments in India, clearly smart POS products are fast emerging as a lifeline for merchants looking for cost-effective ways of running their store operations, minimising risk, driving profitability. As this trend catches up, India’s merchants have a lot to gain from the innovations happening in the POS space.

The author is president & COO, Pine Labs. Views are personal