Mobile point of sale (mPOS) is the use of a smartphone or tablet as a card-acceptance device. The phone either pairs with a small card reader (a "dongle" or pocket-sized reader connected by Bluetooth or cable) or, in the newer "tap to phone" model, uses its own near field communication (NFC) antenna to read contactless cards and wallets with no extra hardware. Market traders, tradespeople, delivery drivers, taxi drivers, pop-up shops and small cafés are typical users.
mPOS sits within the wider family of point of sale (POS) systems. It lowered the cost of accepting cards from hundreds of dollars for a dedicated payment terminal and a bank merchant contract to a cheap reader and an app, and is closely linked to the rise of the payment facilitator model that signs up small merchants quickly under one master account.
mPOS in plain terms
Before mPOS, taking a card meant renting a heavy card machine, signing a contract with a bank and waiting weeks. mPOS is like turning the phone already in your pocket into a shop till, the way a phone also became a camera and a map.
A plumber finishing a job can open an app, type the amount and let the customer tap a card against a small reader or against the phone itself. The app does the bank's checking in the background, sends an email receipt and records the sale, and the money arrives in the plumber's account a day or two later.
History of mPOS
The model became widely known in 2009–2010 when Square, a US start-up, released a small reader that plugged into a phone's headphone socket and read a card's magnetic stripe. The first versions sent the stripe data without encryption, and the swipe-based approach soon met the move to chip cards. Similar services followed in Europe and elsewhere in the early 2010s, often run by payment facilitators that onboarded merchants online in minutes.
As chip cards spread, mPOS providers moved to secure Bluetooth readers that accept the EMV chip, PIN entry and contactless payments. Square, for example, announced a chip reader in 2014 ahead of the US liability shift of October 2015. The next step was software-only acceptance: Android phones with NFC could act as contactless readers from the late 2010s, and Apple launched Tap to Pay on iPhone in the US in 2022, later extending it to other countries.
How mPOS works
- Reader-based mPOS. A certified card reader handles the chip, contactless and, in some models, PIN entry, encrypting card data inside the reader. The phone app only passes the encrypted data and the amount to the provider's servers, so the phone never sees a readable card number.
- Tap to phone (SoftPOS). The phone's NFC antenna reads a contactless card or wallet. A security software development kit (SDK) checks that the phone is not rooted or tampered with, protects the card data and keys, and monitors the device from the provider's back end. PIN entry on the phone's touchscreen is allowed under specific standards, with the PIN encrypted and processed separately.
In both models the provider then sends an authorization request through its acquirer and the card networks to the card issuer, as for any card present (CP) sale.
Security standards for mPOS
The PCI Security Standards Council publishes specific standards for acceptance on commercial off-the-shelf (COTS) devices such as phones. Its Software-based PIN Entry on COTS (SPoC) and Contactless Payments on COTS (CPoC) standards were combined and extended in the Mobile Payments on COTS (MPoC) standard, first published in November 2022 and since updated. Hardware readers are tested under the PCI PIN Transaction Security requirements and EMVCo approvals. Merchants still fall under the Payment Card Industry Data Security Standard (PCI DSS), though validated encrypting readers greatly reduce what they must assess.
Uses, costs and limitations
mPOS providers usually charge a flat percentage per transaction rather than interchange-plus pricing, with no monthly rental. That suits merchants with low or irregular volumes, though high-volume merchants often pay less with a traditional contract. Limitations include phone battery life, reliance on a mobile data connection, and, for tap-to-phone, the inability to read cards that lack contactless capability. Payment facilitators also hold back or delay payouts for merchants whose risk profile is unclear, which can surprise new users.
In emerging markets mPOS has helped extend card acceptance to small merchants, alongside QR code payments and mobile money, and some agent networks use mPOS devices to offer cash withdrawals and bill payments in areas with few branches.