IoT for Payment Terminals: M2M Connectivity in Retail

Eseye author

Eseye

IoT Hardware and Connectivity Specialists

LinkedIn

While the world was already shifting away from cash towards electronic forms of payment, the COVID-19 pandemic accelerated the trend, making contactless bank cards and NFC phone payments more common in retail everywhere.

Point Of Sale (POS) terminals or card readers are an essential part of this infrastructure, and the move to cashless payments has driven an explosion in IoT-enabled POS terminal adoption to make transactions easier for consumers and retailers alike.

The transformative effect of IoT isn’t just being seen in the traditional POS terminals or card readers you might expect in a store or a restaurant however, but also in ATMs, vending machines, parking meters, digital signs and fare collection devices.

A key driver is cellular IoT technology, that enables more types of transactional devices to be used at locations where fixed line connectivity is unavailable or impractical.

The challenges around payment terminals are straightforward to understand, but not so easily solved.

In developed parts of the world where handheld POS terminals are widely adopted, and Bluetooth, WiFi, or cellular connectivity commonplace, the main challenges are around consistent and reliable connectivity.

We’ve all been in a situation where the server has had to take the card reader, and sometimes the payment card, to a different part of the restaurant where there is a better signal. Or for the transaction to fail multiple times causing frustration for both business and customer as well as excessive waiting times for other patrons.

Enterprises in less developed parts of the world and micro-businesses everywhere face an additional challenge. Their needs are simply too small to be met by the big banks and mainstream payment services providers, often preventing them from taking card payments altogether.

But this has opened the door to a wave of payment services offerings targeted at small businesses and leveraging software and apps, known as SoftPOS, that turn mobile handsets and tablets into payment taking devices. Some even offer additional hardware that turns a mobile phone into a card reader, or provide a standalone POS device designed for small businesses.

Yet while these provisions make it possible to accept cashless payments, they do not solve the underlying challenge. Many of these solutions rely on one-size-fits-all connectivity options that fail in some environments, or they encourage the use of consumer SIMs that are not robust enough for consistent and reliable connectivity.

The outcome is always the same – frustrated customers, frustrated employees, and even potential revenue loss, not just for the business but for the payment services provider too.

Payment terminal

For businesses that rely on traditional handheld POS terminals that connect to a WiFi or Bluetooth gateway, reliable connectivity has always been an issue, especially in larger premises such as restaurants or malls, where range and interference create dead spots.

Even larger stores with fixed POS terminals and fixed line internet still benefit from having a cellular backup option in the rare, but not unheard of, event that the fixed line goes down.

For cellular POS and mPOS terminals (mobile POS), consistent connectivity is the challenge. It’s not uncommon for store owners to have multiple card readers from a few different providers each with a different SIM.

Employees will typically use one device until it has a problem processing a transaction, at which point they apologize to the customer, and grab the next one. The problem device is put to the side where it won’t be picked up again until the other two experience problems and it’s cycled back in.

This could mean the provider of that card reader loses hours, days, even weeks of transaction charge revenue until the other devices fail and this one is cycled back in. For the store owner, this could also mean unpredictability in overheads if the different payment services charge different fees for card payments.

Even for mPOS terminals that retain a connection, in a highly congested network environment, such as a busy market or a mall, successful but slow transactions can leave a bad taste in the customer’s mouth and put employees under pressure.

Many standard card payment machines use SIM cards designed for consumer devices that are tied to one mobile network. So while an mPOS terminal might work well in one area of the country, it could struggle to connect in a more rural location or on the bottom floor of a mall. Some suppliers mitigate this problem by providing their customers with two SIMs for their card reader, so if one is not working, they can swap over to the other. But juggling multiple SIMs is a challenge in itself during a busy shopping season.

Contactless payment

Driven by the convenience of cashless – no handling money, no trips to the bank – and accelerated by the pandemic, IoT-enabled POS terminals are becoming more and more common in all parts of the world.

According to Berg Insight, cellular connectivity has become a very popular option for POS terminals and was present in 52% of devices shipped in 2023.

Cellular has an important role in facilitating the global adoption of electronic payments, enabling the rollout of POS terminals to new market segments and geographies where fixed line infrastructure is less available, resulting in 189 million cellular POS terminals worldwide by 2027.

In addition, more than 95% of the world’s POS terminals will be NFC-ready in 2027, and the mPOS and SoftPOS terminal market is growing at about the same rate as the traditional POS terminal segment, enabling businesses to make use of consumer grade smartphones and tablets in combination with apps or hardware card readers to drive an additional 110 million units.

But retail applications for IoT don’t stop there. Add on IoT capabilities to an additional nearly 70 million ATMs, vending machines, parking meters, digital signs and fare collection devices and you have a sizeable market for IoT in retail worldwide.

In fact, a number of hardware vendors are combining retail-ready functions and features into IoT mini-kiosks solutions that provide capabilities for a card reader, receipt printer, barcode reader, POS, and digital signage in one unit, giving small businesses everything they need to set up shop.

The key use case for IoT in retail is to facilitate revenue generation, making POS terminals of any flavor – handheld POS, mPOS, or SoftPOS, ideal candidates for secure and reliable data transmission via cellular.

In retail environments, cellular IoT technology enables connectivity to be added to ATMs, ticketing machines, or lottery machines which can be deployed at locations where fixed line connectivity is unavailable or impractical.

IoT-enabled vending machines are one of the fastest growing segments for cellular connectivity in the retail industry, driven by demand for cashless payment and vending telemetry solutions, such as stock monitoring and filling level measurement. IoT connectivity can be used to send notifications when items are running low and need to be refilled.

The parking industry has been one of the earliest adopters of IoT technology and today approximately 60% of the world’s 577,000 multi-space meters are connected to cellular networks, according to Berg Insight. It is expected that nearly all new multi-space meter deployments will have IoT connectivity as a requirement.

IoT Electric Vehicle (EV) charging stations are becoming a common sight in car parks that serve communal sites such as apartment blocks, offices, malls, and public buildings. They often feature an embedded card reader for easy payment. 

Digital signage solutions have found their way into several vertical markets, including retail, with untapped market potential still vast and growth showing no signs of slowing down. In retail, IoT-enabled electronic displays can be dynamic and even interactive, appearing as digital posters, price signs, information signs and more both indoors and outdoors.

For rapidly expanding retail businesses, IoT-enabled payment terminals and other retail applications can help new stores open quickly regardless of location, bringing the POS online before a fixed line is available, or as the main connection.

The same is true for temporary or pop-up retail locations such as sales points at trade fairs, concerts or sporting events.

Cellular IoT can also be factored in as a seamless backup connection to protect against possible connection failures on fixed line POS terminals.

Yoco payment terminal

Fast-growing Cape Town-based financial technology company Yoco provides mobile card payment devices to upwards of 120,000 small business owners across South Africa. Yoco’s card readers are designed for SME retailers who are too small to qualify for a payment device from the established banks.

Rapid transactions are key to small retailers’ profitability and depend on payment devices being connected and ready to go at all times.

Man using Costa Express machine

Costa Coffee is a leading provider of premium quality drinks which introduced Costa Express and self-service vending machines to extend its reach and market share.

For the Costa Express machine, the services on the embedded device aggregates over 90 sensors including health monitoring, local time synchronization and data route information.

Park'n Plug EV Charge point

EV charging specialist Park’n Plug has been at the forefront of France’s electric mobility revolution with turnkey charging stations in car parks.

Many of these car parks are underground, making it difficult to achieve reliable connections for payments and other information about the charging unit’s status.

Ensuring payment devices and POS terminals work quickly, reliably and consistently means more transactions on that device, which means more revenue for both the retailer and the payment services provider.

Devices manufactured or configured for one use case, such as restaurants and retail stores in New York City may find really good connectivity easy to come by. But if another business deploys the same terminals with the same network configuration at a rural music festival may struggle to find a reliable connection.

Many payment terminal devices coming on the market for SMEs also try to make use of the same SIMs as consumer mobile devices. But in this case networks deliberately drop connections for idle devices, so operators can maximize utilization of networks.

Designed-for-IoT cellular connectivity solutions allow continuous connectivity without dropping, so that when a payment is entered, the device is immediately ready to help process it.

A convenient solution is to use a multi-IMSI SIM like Eseye’s AnyNet+ SIM. We have agreements with all the major global mobile network operators and can connect to whichever network has the best capacity at the time and place the mobile payments terminal is used.

Eseye’s AnyNet SMARTconnect™ gives IoT devices the intelligence to swap to another network if connectivity drops, and future-proofs the device by allowing new networks and operators to be easily introduced. It also provides the building blocks to enable connectivity applets with access to multiple RATs – for example cellular, Zigbee, Thread, Bluetooth, LoRaWAN and satellite.

Hera – our range of specialist IoT edge hardware – meets your evolving IoT needs for consistency and reliability.

Hardware and software is underpinned by Eseye’s Infinity IoT Platform, connectivity management software that gives payment services providers and card reader suppliers optimized connectivity for each device, as well provide full-lifecycle connectivity management.

IoT for Payment Terminals: M2M Connectivity in Retail

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Eseye author

Eseye

IoT Hardware and Connectivity Specialists

LinkedIn

Eseye brings decades of end-to-end expertise to integrate and optimise IoT connectivity delivering near 100% uptime. From idea to implementation and beyond, we deliver lasting value from IoT. Nobody does IoT better.