Guide to SoftPOS: Turn Any Phone into a Payment Terminal

For decades, accepting card payments meant dealing with expensive hardware terminals. Merchants relied on bulky countertop machines or mobile wireless terminals, which came with rental fees, deposits, maintenance contracts, and annoying shipping delays.

That era is ending.

We are seeing a major change in the payments landscape due to SoftPOS (Software Point of Sale), also known as “Tap to Phone”. This technology is making financial technology accessible to more people by turning the smartphones we already carry into effective payment terminals.

In this guide, we will look at how SoftPOS systems work, the strict security standards (MPoC) that keep them safe, and why this technology is becoming essential for modern commerce.

SoftPos Trends

While estimates differ, all indicate strong growth.

• Market Size: Grand View Research values the SoftPos market at $365 million in 2024, projecting growth to $1.24 billion by 2030 (CAGR 23.1%). Strategic Market Research is more optimistic, predicting a $12.5 billion valuation by 2030.
• Transaction Volume: The key metric is the amount of money processed. Juniper Research expects global transaction value through SoftPOS to jump from $23.9 billion in 2025 to $540 billion by 2030, a growth of 2,150%. This indicates a shift from small pilot programs to larger transactional flows.
• Installed Base: The number of smartphones operating as SoftPOS terminals is expected to hit 61 million by 2028.

What is SoftPOS (Tap to Phone)?

SoftPOS is a technology that allows merchants to accept contactless card payments directly on a Commercial Off-The-Shelf (COTS) device, usually an Android smartphone or iPhone, without any extra hardware.

Using the Near Field Communication (NFC) chip found in most modern smartphones, a SoftPOS app directly interacts with a customer’s contactless card or digital wallet (like Apple Pay or Google Pay).

How the Technology Works

The process is straightforward for users but complex behind the scenes:

1. The merchant inputs the transaction amount into the SoftPOS app.
2. The customer taps their card or phone against the back of the merchant’s device.
3. The app encrypts the data and sends it to the Payment Service Provider (PSP) in the cloud.
4. The transaction is approved or declined within seconds, with a digital receipt sent via email or SMS.

SoftPOS vs. Traditional Hardware Terminals

For a softpos system for small business, the advantages over legacy hardware are clear.

Feature	Traditional Hardware Terminal	SoftPOS System
Setup Cost	High (Device purchase or deposit)	Low (Free app download)
Monthly Fees	Lease fees ($20–$50/mo per device)	Often $0 (Pay-as-you-go)
Mobility	Limited (Dongles or charging bases)	High (Anywhere with cellular data)
Maintenance	Requires shipping for repairs	Instant app updates
Scalability	Slow (Wait for shipping)	Instant (Download on new phones)

SoftPOS vs. Traditional Hardware Terminals: ROI Modeling

For a mid-sized merchant with 10 checkout points:

• Legacy Model: 10 terminals at $40 per month lease equals $4,800 per year plus $500 for paper and supplies, totaling $5,300 per year in fixed costs.
• SoftPOS Model: 10 enterprise tablets (depreciated over 3 years) or employee devices plus app fees. If the app fee is included in the transaction rate (like Stripe or Square models), the fixed cost is $0.
• Savings: The merchant saves over $5,000 annually in direct costs, plus gains the added benefits of mobility and space savings.

Security & Compliance: From CPoC to MPoC Standards

For many merchants, the hesitation to adopt SoftPOS does not stem from convenience but from trust. Processing financial transactions on the same device used for social media or games raises concerns about data theft and malware.

However, SoftPOS is not merely an app on a phone. It is part of a highly regulated ecosystem governed by strict standards from the PCI Security Standards Council (PCI SSC). To gain trust in the technology, businesses need to understand the two main standards that guide it: CPoC and MPoC.

From CPoC to MPoC: The Evolution of Safety

The regulation of software-based payments has quickly adjusted to keep up with technology.

• CPoC (Contactless Payments on COTS): Introduced in late 2019, it was the first standard aimed at supporting contactless payments on consumer devices. However, it had a key limitation: it did not allow PIN entry on the smartphone touchscreen. This meant CPoC solutions were limited to the contactless “floor limit” (like £100 in the UK or €50 in the EU). Any transaction needing Strong Customer Authentication (SCA) via PIN forced merchants back to physical terminals or separate Bluetooth PIN pads. This hybrid model fell short of delivering a true “software-only” solution.
• MPoC (Mobile Payments on COTS): MPoC is the new, stronger standard built on CPoC (contactless) and SPoC (software PIN entry). It allows flexible “all-in-one” COTS acceptance designs. In essence, MPoC combines SPoC and CPoC benefits so that one off-the-shelf phone or tablet can securely manage the entire payment (both tap and PIN) without extra hardware. This is transformative for restaurant SoftPOS systems and luxury retail, where transaction amounts often exceed contactless limits.

How Data is Protected: Attestation and Encryption

When a merchant uses a SoftPOS system, security measures work behind the scenes to ensure the device is secure before and during every transaction.

• Device Attestation (Health Check): Before launching the SoftPOS app, it performs a thorough scan. If the phone is “rooted” (Android) or “jailbroken” (iOS), removing manufacturer restrictions, the app will not open. This stops hackers from using modified operating systems to steal data.
• PIN on Glass & Secure Input: When a customer enters their PIN, the app uses a “Trusted User Interface”. The keypad numbers often shift slightly to confuse screen-recording malware, and data is encrypted right after entry. Card information never gets stored on the phone’s local storage or photos.

Why SoftPOS is Vital for SMBs and the Gig Economy

Visa reports that its Tap to Phone SoftPOS solution grew by 200% year-over-year (FY2024), serving millions of merchants of all sizes. Almost 30% of these merchants are new small businesses, showing that SoftPOS is helping many small sellers enter digital payments for the first time.

“Tap to Phone is a tech equalizer for businesses. Walk into some of the world’s largest retailers or go to your local farmer’s market and they’re using this same technology to accept payments right on their phone,” said Mark Nelsen, Global Head of Consumer Products, Visa.

The move to software-based payments offers three clear advantages that hardware cannot match.

• Cost Efficiency: By cutting out hardware leases, businesses can significantly reduce their operating costs. For a small business with narrow margins, saving $500 a year on terminal rental fees is significant.
• Speed of Onboarding: In the traditional model, a new merchant must wait days or weeks for a terminal to arrive by mail. With SoftPOS, a merchant can sign up, complete KYC (Know Your Customer) checks, and start taking payments in under an hour.
• Elastic Scalability: Think about a retailer during the holiday season. Instead of investing in extra terminals that will sit unused after January, they can simply have temporary staff download the SoftPOS app on company devices, instantly boosting their checkout capacity.

High-Impact Use Cases for SoftPOS Systems

While almost any business can benefit, some industries are seeing huge returns from adopting SoftPOS systems.

SoftPOS for Restaurants and Hospitality

Efficiency in hospitality relies on quick table turnover. Restaurant SoftPOS systems let servers take payments directly at the table right after the meal.

• Benefit: Servers no longer need to return to a fixed station to print a bill, then come back to the table, and then return again to process the card. The transaction can happen in one smooth motion, lessening friction and increasing tips.
• Split Payments: Modern SoftPOS apps often feature “split bill” options that are much easier to use on a smartphone screen than on a traditional terminal display.

Delivery Fleets and Logistics

For logistics companies, outfitting 50 drivers with hardware terminals is a financial risk. Terminals often get dropped, lost, or broken.

With SoftPOS, drivers can simply use their company-issued smartphones (which they already use for navigation and signatures) to accept payment upon delivery. This merges three devices (GPS, scanner, terminal) into one.

Pop-up Shops and Freelancers

For seasonal markets, consultants, and tradespeople (like plumbers and electricians), carrying a card reader is one more thing to remember. A SoftPOS system ensures that as long as they have their phones, they are “open for business”.

Choosing the Right SoftPOS System for Small Business

Not all SoftPOS apps are the same. When you use the bilixe, a directory of payment providers, to compare companies, pay attention to these key differences:

• Third-Party Integration Capabilities: A standalone payment app is good, but one that works with your cloud accounting software, like Xero or QuickBooks, or your inventory management system is better.
• Device Compatibility: Android took the lead, but Apple’s “Tap to Pay on iPhone” has changed the market. Make sure your chosen provider supports the operating system your team already uses.
• The Provider Ecosystem: Some acquirers offer SoftPOS as a free add-on to their standard merchant account. Specialized ISOs might charge a small fee per transaction for the app’s extra features.

The Future of In-Person Payment Acceptance

As SoftPOS develops, it is merging with other digital trends.

Convergence of Loyalty and Payments

The next step is Google Smart Tap and Apple’s NFC Value Added Services. These protocols allow for a “One-Tap” experience where one interaction shares both payment details and loyalty membership. A customer taps their phone, and the terminal immediately recognizes their loyalty tier, applies discounts, and processes the payment. This removes the awkward step of scanning a separate QR code or barcode.

Biometric Authentication as the New PIN

While MPoC enabled PIN on Glass, the future lies with biometrics. We are moving toward situations where the merchant’s device can authenticate the shopper through biometrics, although privacy regulations currently limit this. Merchants may also use their biometrics, like FaceID, to securely log in and authorize high-value refunds, replacing static manager PINs.

SoftPOS Orchestration

The “terminal” is becoming an app ecosystem. Future SoftPOS apps will not only process payments but will also serve as orchestration layers. They will route transactions to different acquirers based on fees, success rates, or location optimizing the merchant’s profits in real-time.

The Obsolescence of Legacy Hardware

While traditional terminals will remain crucial for high-volume places like supermarkets, where speed and durability matter most, SoftPOS is set to take over the mPOS (dongle) market and the lower to mid-range terminal market. 71% of merchants expect SoftPOS to fully replace traditional terminals by 2030, per a 2024 PYMNTS report.

Ready To Ditch The Hardware?

Finding the right provider can be tricky. Use bilixe’s smart filters to look for payment providers that offer SoftPOS capabilities. Compare their transaction fees and read reviews from other merchants who have made the switch. To get a list of payment providers with SoftPOS solutions, simply set the “Acceptance Channels” filter to In-Store (POS/SoftPOS).

Conclusion

SoftPOS is a structural evolution of the payments industry. It offers scalability, flexibility, and economic efficiency that were previously unattainable. It allows financial inclusion for micro-merchants and provides operational agility for global enterprises.

For merchants, the question is no longer whether to adopt SoftPOS, but how quickly they can integrate it to stop paying for hardware they no longer need. The hardware terminal is outdated, long live the terminal app.

FAQ: Guide to SoftPOS: Turn Any Phone into a Payment Terminal