Customers today make payments digitally at in-store merchant locations primarily through either POS terminals
or using a QR code. POS terminals have a steadily growing market in merchant categories such as restaurants,
grocery stores, apparel stores, jewelry stores and fuel stations. These verticals record the highest volume and
value of POS transactions across the country. With the rapidly increasing penetration of e-commerce in the
country, mPOS implementation has enabled doorstep delivery of products. Financial transactions at the doorstep
have been made possible digitally, in a more versatile manner, using mPOS terminals.

The payment card and POS terminal markets are closely intertwined as the relative growth of the card market
results in the growth of the POS terminal market.

Android-Based POS Terminals

Android accounted for the largest share of the global smartphone operating system, accounting for 72% of the
market share and leading the competitor iOS by 26%.

Compared with traditional desktop POS terminals, Android-based POS terminals have many advantages. An
intuitive interface similar to a smartphone makes them easier to operate. They can improve people’s payment
efficiency and save more time. They are workable for restaurant online car parking, food delivery, mobile top
up, airtime recharge, bus ticketing and bill payment, among others. Benefits include being cost-effective and
having a wide range of hardware and software options. Android POS systems offer a number of different
functions beyond just receiving payments from customers. These mobile software solutions can also provide
vital services such as:

Inventory management;

Stored customer data;

Sales data;

Employee management;

Portability;

Better customer interactions;

EMI options;

Billing system integration; and
Value-added services such as BBPS.

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Market Evolution

India’s POS terminal market is at the growing stage due to an increasing penetration of credit and debit cards
coupled with rising e-commerce growth in India. Credit card transactions have risen by a CAGR of 17.6%,
while debit card transactions have increased by a CAGR 2% in last five years. POS transactions from debit
cards have increased by 28% in the last five years, while there has been a decline of 2% in ATM withdrawals
through debit cards, showing an increasing preference for digital payments. Additionally, changing customer
preferences towards a high volume of cashless transactions have driven the demand for POS terminal devices in
India. Further, retail merchants are making attempts to enhance customer experience by offering flexible
payment solutions with advanced payment options at the POS terminal.

The penetration rate of smartphones in India reached 42% in financial year 2020 and was estimated to reach
51% in the financial year 2025. The increasing use of smartphones and tablets in India is further anticipated to
drive the demand for mPOS solutions, especially in the retail sector. For example, in shopping malls, mPOS
devices aid merchants in taking the final checkout process to the consumers themselves, thereby enabling
vendors to assist shoppers from anywhere in the store.

Further, post demonetization, the Ministry of Finance announced incentives for the promotion of a digital and
cashless economy, which included discounts on fuel payments made through digital means, removal of service
tax on MDR for low-ticket transactions, and financial support from the National Bank for Agriculture and Rural
Development on rural deployment. These incentives, combined with the effect of demonetization, led to
significant expansion of the POS and card industries.

Emerging Market Trends

Along with the introduction of new payment methods such as NFC technology and QR code-based systems in
India, retailers are expected to either upgrade or install new devices to use these technologies.

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