The point of sale industry has been changing rapidly since the release of the iPad in 2010. While the last few years have seen new entrants and technologies, this market has exploded in the last few months. What does that mean for the remainder of 2018?
Aggregation and Consolidation – As the market continues to heat up, the big players in the space have made their strategic intents clear via their acquisitions. Square purchased Weebly a few months ago, signaling their foray into the online market. With their strong foothold in the brick and mortar space, they are now announcing their intent to try and cover the entire ecosystem. PayPal is going in the other direction as they recently purchased iZettle, which gives them coverage in the offline world and some hardware to boot. Is this the end of M&A activity for the year or an indication of things to come? What will First Data, Chase and other processors do in response?
Public Equities Soaring – Shopify has more than doubled in the past 12 months and Square has nearly tripled. In addition, Ayden went public on the Amsterdam exchange last month. It appears that public equity investors are excited about this space and eager to get a piece of it.
More mobile payments – Apple, Google and Samsung have all been growing their mobile payments platform.Though mobile payments make up a small amount of the total payments volume, we see them growing significantly in 2018 for a few reasons. They are more secure, newer devices will make it easier to pay with your phone or watch and more merchants will start accepting them as they upgrade their point of sale or terminals.
Blockchain payments – Although not widely accepted or adopted yet. many startups and incumbents are developing blockchain payment technology. This will continue to reduce friction and lower or even eliminate interchange fees.
eCommerce – In 2017, eCommerce accounted for 9% of all retail sales in the U.S. That number seems low to people who have at least one Amazon package waiting at their doorstep everyday, but not to worry, we expect it to grow quickly. As Amazon makes it easier to accept packages and other services ordered online and smaller retailers take advantage of Shopify and other eCommerce platforms, consumers will find it even easier to order goods online and receive them quickly.
Lower fees – As point of sale companies grow larger and have additional ways to generate revenue, we believe the fees they charge for the point of sale app will drop. The decrease in revenue will be offset by selling add-ons (eCommerce, loyalty, payments, etc.) and additional services to a larger customer base. Often, this will come in the form of bundles services. Point of sale companies will also be able to utilize the larger dataset they have on their users as well as the customers of those users.