Key approaches to and aspects of SoftPOS solution implementation
Intro: the benefits of a SoftPOS solution for retail point of sale
In one of our recent articles we described the concept of software point of sale systems or SoftPOS. Are you a software platform, a shopping cart, or a PayFac, that wants to implement a SoftPOS solution for your (sub)merchants? If so, then this article is definitely for you. In it, we outline the main software point of sale system costs and the aspects of SofPOS solution implementation.
The key benefit of a SoftPOS solution is that it does not require usage of any special hardware. No payment terminals or dongles, just your mobile device equipped with NFC circuit, with SoftPOS app installed on it. Much better than regular EMV terminal or mPOS solutions. Moreover, by eliminating the need for physical terminal usage, you also eliminate almost all terminal-related costs. This move results in considerable savings.
No wonder, such inexpensive point of sale systems as SoftPOS are becoming more and more popular. They are particularly relevant for SMEs and micro-merchants, including those from developing countries. Many of these merchants are working “in the field”, so SoftPOS solutions enhance their mobility. At the same time, large platforms are looking for ways to enable their (sub)merchants to accept payments through SoftPOS. For this purpose, they need to add SoftPOS functionality to their existing omnichannel payment solutions.
Conceptual approaches to implementation of a SoftPOS solution
In terms of implementation, a SoftPOS solution is similar to payment gateway implementation. Essentially, SoftPOS is a special app or software product. So, you can either build such innovative point of sale systems from scratch, or use white label offerings.
A white label SoftPOS solution takes less time to implement, it involves less responsibilities and requirements, and provides less control. Although upfront costs are low, recurring costs (such as transaction and monthly subscription fees) might be higher than in the case of an in-house solution.
Your own custom solution provides more control and does not involve software fees and transaction costs (outside of interchange). However, it requires huge upfront costs, takes more time to implement, and is associated with higher liability level.
In either case (white label or custom solution) it is important to analyze all the critical aspects in advance. Otherwise, you might face unpleasant surprises in the future, as you use the solution.
If you are building a custom solution in-house, you should clearly understand all the phases, components, and aspects of the process. Moreover, if you choose to use a white label SoftPOS solution, you should understand them as well. Reason: even if the solution is built by a third party, there should be no blind spots for you in the development process. Otherwise, you might experience unexpected technical issues further down the road.
Now let us outline the key aspects and components of the implementation process.
Important aspects of the SoftPOS implementation process
Acquiring partnership first!
Just like in the case of a payment gateway solution, the first important aspect is your acquiring partnership. You should clearly define the acquiring bank that will issue merchant accounts and perform initial merchant background verification. Are you interacting with the acquirer through a third-party or white label service provider? Well, then you should verify whether the acquirer can underwrite merchants that you want to accept payments through SoftPOS.
Key injection
Next, you need to define the prospective key injection mechanism. Reason: in order for the customers to input PINs through smartphones or other devices, these devices should be injected with encryption keys. Encryption methods can be rather complex and call for usage of special hardware security modules (HSM). Here are some common questions regarding key injection you should be able to answer.
- Who is going to inject the keys (and how)?
- Will this entity support your target encryption and injection methods?
- Does it have (or can it obtain) the encryption keys from your target acquirer/processor?
If you develop a custom solution, then you might implement the key injection mechanism in-house as part of the development process. However, if you are choosing a white label solution provider, then you need to know for sure that it will be able to inject the keys, issued by your target acquirer/processor.
EMV kernel
Beside the key injection strategy, you should define which EMV kernel you are going to use. The important questions to ask at this point are as follows.
- Who owns and supports the kernel?
- Is it a licensable product?
- What are the associated fees (if you are licensing the product)?
If you develop the EMV kernel in-house, then you also have to go through level 2 certification of this kernel. Licensing a kernel (instead of building it) involves lower upfront costs and is less labor-intensive (no development and certification effort). On the other hand, if you license one, you will likely have to pay maintenance and support annually.
SoftPOS solution deployment
The next phase is implementation and deployment of the SoftPOS solution itself. We should note that it should be a relatively straightforward process, as most SoftPOS solutions are basic Android applications. In January 2022 Apple was reported to be working on its own SoftPOS solution . According to the news, it will allow Apple customers to accept payments through their iPhones.
Payment gateway partnership
In order to implement a SoftPOS solution, you have to partner with a payment gateway. This gateway should be PCI certified and integrated with your chosen acquirer. More detailed explanations on this subject are available in our respective articles and white paper on how to own a payment gateway.
SoftPOS solution certification
In addition to PCI audit of your SoftPOS solution, it has to be certified. So, you need to choose the certification company in advance and include certification process cost within your budgets and estimates.
To summarize
We have outlined the key aspects you have to analyze before seriously considering the possibility of SoftPOS solution development. The process is somewhat similar to payment gateway implementation.
If you want to implement a SoftPOS solution for your merchants, but need more info, contact us! We have our own licensable SoftPOS product. Besides that, our omnichannel payment technology UniPay Gateway supports various other payment terminal solutions. So, our experts should be able to help you with your particular SoftPOS implementation use case.
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