Asian consumers continued preference for purchasing with cash, as well as low credit card user base in large markets such as China, India, and Indonesia still pose hurdles for proponents of mobile point-of-sale (POS). That said, vendors will need to stay ready for shift in consumer mindsets, industry observers urge.
Tom Wills, senior analyst for risk, fraud, and security at Javelin Strategy & Research, noted that mobile POS in Asia is "not ready for prime time" just yet. The biggest challenge lies in the "cash culture that is deeply ingrained in all Asian countries", with the exception of Japan and South Korea, he stated.
Moreover, emerging markets such as China, India, Indonesia, and Bangladesh do not have a large user base for debit or credit cards. This "basic challenge" of getting people to use these payment methods will have to be overcome before mobile POS conversations with retailers can take place, Wills said.
"Merchant adoption of a payment technology has to be driven by consumer demand, otherwise rolling it out is basically a science project," he added.
In terms of vendor activities in the region, Wills noted PayPal appears to be the most visible player after its PayPal Here service was launched in Hong Kong and Australia. Singapore-based Swiff has also launched its service, but the analyst has yet to see a huge uptake. Swedish startup iZettle, too, has been "nosing around in Asia" but there is no indication of an actual launch, he added.
Mark Glover, associate for retail automation at Retail Banking Research (RBR), added there are a few small signs of mobile POS deployments in Asia but the region is still a "long way" behind North America.
"Even in Japan, little progress had been made at the time I attended the RetailTech tradeshow in Tokyo in March 2012,"Glover recounted, adding that while every Japanese point-of-sale vendor was exhibiting their mobile POS offerings during the tradeshow, very few domestic merchants were active users.
He cited a large domestic manufacturer who told him that "everyone is at the pilot stage", and those that earlier boasted of using mobile POS for more than a year actually used the system for inventory search in the back office rather than front-end point-of-sale.
In China, local retailers think mobile POS has limited use and is restricted to sub-segments of general merchandise, particularly for clothing and departmental stores, the RBR analyst stated. Others think the payment method is just another channel to support existing electronic POS (EPOS) systems, he added.
Educate the market To boost the use of mobile POS in the region, Glover said merchants will need to be convinced that they can move away from EPOS to the mobile version with no loss in functionality and reliability.
Wills added that for this to happen, industry players will need to put considerable resources into educating the market, both merchants and consumers alike, to change their payment habits.
Vendors should also stay on top of tech changes, the Javelin senior analyst noted.
"I believe that plastic cards are going to turn digital and disappear into our mobile wallets within a few years. Unless mobile POS vendors can adapt their technologies to accept NFC (near-field communications) or SMS and USSD (unstructured supplementary service data) payments, their products aren't going to have a very long lifespan," he said.
Despite the analysts' observations, some mobile POS player expressed its confidence in the Asian market.
Chris Ciabarra, co-founder and CTO of Revel Systems, said the company, which currently has about 400 customers and is growing at a rate of 50 a month, plans to expand into Asia in 2013. Its cloud-based POS offering allows merchants to use Apple's iPads as cash register machines.
Ciabarra said the company competes with the free mobile POS market by advertising its features and partnering with the right businesses. Some customers who have used free mobile POS would turn to Revel for a more "enterprise system", he added.
Jerome Cle, CEO and founder of SCCP Payment Services, whose company launched Swiff, added that response for the company's mobile POS has been "extremely positive" since its launch in 2012. Besides Singapore, the device is offered in Malaysia, Indonesia and Russia and will be available in Thailand in the next 2 months.
Cle believes that the industry should highlight the benefits of cashless payments such as convenience, mobility, efficiency, low cost of operation and security. "For example, through mobile POS, businesses can improve their efficiency by processing faster transactions, replacing existing credit card terminals and reducing waiting time," he said.