Tech startups like Pine Labs, Mswipe, Jumbotail and big companies like Reliance Jio have already begun pushing their own branded “smart PoS" machines with Android operating system (OS), sporting an LCD touch screen, bar code reader, and connectivity features like 4G and Wi-Fi.
According to Vicky Bindra, CEO of Pine Labs, smart PoS machines are catching up fast in smaller (tier 1 and tier 2) towns that are starting to migrate to digital payments. “Retailers and merchants from diverse sectors such as electronics, food and beverage, fashion, pharmacy, telecom, and airlines are adopting the new smart PoS machines to improve their efficiencies and enhance consumer’s shopping experience," added Bandra.
Mswipe’s CEO Manish Patel likened the new PoS devices to smartphones, adding that just like the evolution of feature phones with basic SMS and calls-support to more smarter touchscreen-based devices, the PoS machine too is evolving.
“Today a smart PoS device is not just accepting cards, but they can also provide UPI (unified payments interface) pull transactions, QR codes (displayed on screens), NFC (near filed communication) transactions, wallet transactions, or basically, any payment mode that is available in India," said Praveen Hari, a fellow at industry body iSPIRT.
Analysts also point out that, unlike in developed markets like the UK, US and China—where merchant payments still depend on a mix of QR codes, digital wallets, and NFC-enabled card payments—payments companies in India are targeting retail merchants by integrating all payment form factors into a single smart POS device.
For example, Pine Labs’s PoS machines are equipped to accept over 50 modes of payment including UPI and Google Pay payments which allows merchants to send a payment request to user’s UPI ID or Google Pay ID. This trend also helps in collecting valuable data on sale volumes, GST, stock keeping units (SKUs) in different stores, as well as data of wholesale purchases.
Consider the case of Bengaluru-based Jumbotail, an online wholesale marketplace for food and grocery products.
According to Jumbotail’s co-founder Ashish Jhina, today smart PoS machines can do four key business functions: payment, billing, inventory management, wholesale procurement. But he believes the larger opportunity is beyond just payments.
Jumbotail allows grocery stores and kiranas to place on-demand orders for grocery and food stocks via their app. Each SKU with a merchant is tracked in real-time, and using data points like purchase volumes (from wholesalers), and sale volumes (pulled from PoS machines), Jumbotail claims it can accurately predict the time a merchant may require to stock up.
“We have seen that at least 20-30% of stock-outs (with grocery merchants) can be avoided by tracking SKUs in real-time. As soon they (merchants) notice that a particular SKU is dropping below the limit, we can notify them in real-time to make a quick purchase or recommend an alternative product for the same SKU," Jinha explained.
Smart POS data is also valuable for credit scoring. Apart from avoiding stock-outs, store-level data can also serve as alternative credit scores, especially for kiranas and mid-sized supermarkets who don’t really have the means to avail formal credit facilities. “The GST data itself is good enough for a lender to make a lending decision and the shopkeeper or his FMCG distributor now has an incentive to report all the transactions. The transaction data itself can help a lender make a lending decision," explained Hari.
Mswipe, for instance, is already using store-level data points to help its merchant base to take credit and pay them back in instalments. “We have engineered a credit model where when our merchants can borrow money (to make wholesale purchases) from any of our NBFC partners, based on data we provide…In terms of recollection, the merchant can opt to pay back in daily and monthly instalments," said Patel.
To be sure, apart from lending, startups including Mswipe and PineLabs are also opening up their smart POS devices to third-party developers to allow creation of mobile apps tailored for retail merchants. PineLabs also recently launched a dedicated app store to house third-party developers’ apps especially across areas of online and offline payments, customer feedback capture, travel and ticketing, ride-sharing, and food and e-commerce delivery.