Why Software-based Payment Solutions on Consumer Smartphones are a Game Changer

Mobile POS

Across Europe, the way we pay is changing – and many societies are moving quickly towards a cashless and contactless future.

Between 2018 and 2019, the proportion of in-store transactions that were contactless more than doubled. Meanwhile, over a third of consumers not already using contactless recently reported that they would now be at least “very likely” to adopt it in the near future. Spurred on by the hygiene needs surrounding the COVID-19 pandemic, this trend doesn’t look likely to slow.

Consumers are driving the demand for flexibility in their payments, and merchants also see the safety and flexibility benefits of going beyond cash. Figures suggest that merchants are taking action: in the year to 2019, the proportion of European stores accepting contactless payments – i.e. contactless cards or mobile wallet payments – rose from 42% to 70%.

Yet, this still leaves many merchants not offering options that consumers now expect. A number of things may explain this: hesitancy to invest in payment hardware – or a belief that there’s no reliable, affordable, or flexible solution for smaller businesses – food trucks, street vendors, or mobile merchants.

In this article, we’re exploring one option that reduces the need for dedicated payment hardware. It’s a smartphone-based payment solution, with which your own device turns itself into a fully-fledged payment terminal. This could work in three ways for consumer off-the-shelf (COTS) devices:

  • Software-based PIN Entry on COTS (SPoC): Accepting PIN on smartphones with additional dongle
  • Contactless Payments on COTS (CPoC): Accepting cards on smartphones without additional dongle but without PIN capability
  • Contactless Payments on COTS (CPoC) with PIN: Card and PIN are accepted on the same device

Who Needs a More Flexible Way to Accept Electronic Payments?

Conventional hardware solutions for accepting payments, in which a card-reading terminal links up to a fixed point-of-sale (POS), are not suitable for all businesses. They often require upfront investment (to buy or rent), physical space, and a stable network connection to be possible. But when your business is tiny, or you work on the move, something more flexible and lightweight might be preferable.

Microbusinesses and pop-ups would be the first to benefit from a more agile payment solution. An app-based POS would allow micro-merchants to accept electronic payments at any time – wherever 4G or Wi-Fi service is available, without the expense of adding any extra hardware or devices.

Similarly, event merchants – including food trucks, merchandise stands, and street vendors – often choose to avoid electronic payments due to the burden of a fixed payment terminal. For vendors often on the move, issues of connectivity and power remain familiar problems, despite the growth of mPOS alternatives. Smartphone-based payments could break those barriers to accepting electronic payments.

And historically, the perceived costs of setting up cashless payment hardware has contributed to the slow pace with which small businesses have adopted the technology. An affordable alternative, in which downloading a mobile app is the only investment, would open up businesses to new customers who no longer carry cash. However, it’s not only these smaller businesses that would benefit. Larger chains or corporates can benefit by integrating it into their own solutions.

For example, home delivery companies, large retailers, or food retailers who deliver to people’s homes may want to integrate payment within their ECR rather than having a separate device. And within restaurants, the waiter could also have multiple devices that are all fully integrated.

What Merchants Need from a Flexible Payment Solution

The appeal of traditional payment terminals is that they are tried and tested – and trusted as secure by merchants and customers alike. The challenge for any flexible alternative is to guarantee the same security while accommodating for the demands of different users.


When handling payments, security is the important consideration – for both merchants and customers. Meanwhile, the concern about security is sustaining some people’s reluctance to adopt contactless.

Traditional payment terminals only use hardware that is PCI-compliant, whilst their software is purpose-built, too – so merchants can be sure it is secure. For smartphone-based alternatives, total security would be more of a challenge, as payment applications naturally operate alongside different apps that are downloaded onto the same smartphone (or tablet).

Whilst tricky, securing smartphone-based payment terminals is far from impossible. PCI released a new standard for contactless payment on COTS devices just last year – and any mobile payment solution would need to ensure strict adherence to the standard in order to reassure all users.


Fixed payment terminals have it easy. As they’re often used within a static commercial environment, network availability is taken for granted. When away from these sites, however, connectivity issues can create some obstacles to frictionless payment.

Any flexible app-based payment solution would need to ensure connectivity on the move. However, many mPOS solutions already struggle with problems of poor bluetooth connectivity between devices – a frustration for both merchants and their customers. Software-based payment solutions could sidestep this problem, with NFC reader and point-of-sale integrated into one 4G (or 5G)-enabled device.


When you’re running a small business, costs can soon pile up. While there are a lot of appealing rental packages available to businesses who want terminals, you might be searching for an alternative solution. Micro-merchants in particular are searching for affordable ways to accept payments, but the costs of mPOS solutions still appear to be putting them off. Affordability has to be at the heart of any new payment technology, but without compromising quality, reliability, and security.


Traditional payment terminals can be a little inconvenient to merchants on the move, and they become impossible when devices need to be fixed to a countertop point-of-sale system. Similarly, while mPOS solutions are more lightweight and portable, they often require extra connected hardware to function.

With smartphone penetration of over 80% in western Europe, these mobile devices offer total flexibility if they can be turned into payment terminals using software only. Quick, easy, and fast.

Summary: The Software-Based Smartphone Payment Solution

A software-powered (app-based) smartphone payment terminal means that merchants have extra flexibility in the payment solution they choose – as well as having a useful backup if their main system fails. With smaller expenses and easy onboarding, micro-businesses, pop-ups, and other vendors can start accepting electronic payments quickly – without the need for an additional piece of equipment.

CCV is thrilled to be announcing our own app-based payment solution soon. Stay tuned (follow us on Linkedin) for more information about how you can turn your smartphone into a payment terminal and start accepting credit card, debit card, and mobile payments quickly and easily.