A study from the Digital Innovation Observatories at Italy's Politecnico di Milano university found that, in the first half of 2023, transactions made with mobile phones and wearable devices in Italian stores totalled €12.2 billion, up 97% from the same period the previous year. Today more than ever, it's important for businesses to accept card and digital wallet payments. This can be achieved by using your smartphone as a point of sale (POS), without physical terminals or costly extra equipment. Let's look at what it means to use a phone as a POS, the different types available on the market, the benefits of a mobile setup, the costs involved and how to start taking payments on your device.

What's in this article?

• What does using a smartphone as a POS mean?
  
• What types of POS are available?
  
• Benefits of using a smartphone as a POS
  
• How to accept payments on a smartphone
  
• How much does POS on mobile devices cost?
  

What does using a smartphone as a POS mean?

A POS is an electronic system that handles transactions made with credit, debit or prepaid cards. Until a few years ago, accepting card payments required dedicated hardware, which can be expensive. However, the software point-of-sale (SoftPOS) technology now lets a smartphone serve as the checkout terminal. It turns phones, tablets or other NFC-enabled mobile devices into tap-to-pay readers with the same features as a traditional POS – near-field communication (NFC) is a short-range wireless protocol that allows two compatible devices to share data just by being close to each other. This is the technology that powers contactless payments.

What types of POS are available?

Before discussing how a smartphone can operate as a checkout system, let's look at the different types of POS available on the market. Legacy countertop units have served shops for years but rely on dedicated terminals that can be costly to buy or rent and involve complex hardware management. New options are better suited to the needs of a growing and more diverse customer base. The key models include:

• Traditional fixed countertop POS
  This classic setup is connected through a phone or internet (Ethernet) cable. It's ideal for businesses with fixed checkout points, such as supermarkets, pharmacies and restaurants.
  
• Wireless POS
  This version mirrors the countertop unit but can be removed from the base connected with a cable and used within a range of around 10 meters via Bluetooth. It offers the same technical features as a stationary POS but is more flexible and easier to use.
  
• Mobile POS
  Also known as mPOS, this advanced reader pairs with a smartphone or tablet over Bluetooth and works through a dedicated app, borrowing the mobile internet connection. It doesn't need a SIM card or landline, which makes it a more budget-friendly option, especially for small- and medium-sized businesses. Because it works through software, it cuts installation costs and allows for a quick setup – fixed POS systems require more time and infrastructure.
  
• Virtual POS
  Also known as a web POS, a virtual POS is a digital tool that lets businesses accept credit or debit card e-commerce payments without a physical terminal. Accessed through a secure web interface – typically integrated into the e-commerce site or powered by a banking platform – it suits anyone selling products or services online or remotely.
  

Benefits of using a smartphone as a POS

There are many advantages to using a smartphone as a POS, mainly for those seeking a convenient, affordable and flexible tool to handle electronic transactions or for businesses on the move. Here are the main benefits:

• Ease of use and enhanced customer experience
  This system shortens checkout times and makes paying more convenient. The user-friendly applications are straightforward to establish and don't require a technical background.
  
• Portability and flexibility
  No fixed location is necessary, making this ideal for freelancers, street vendors and operations on the go. Card taps can be accepted anywhere, which makes this an excellent solution for events, fairs or home deliveries.
  
• Reduced costs
  The smartphone acts as the terminal, meaning there is no need to buy or rent a traditional POS device. There are often no setup costs or fixed charges – businesses only pay per transaction. This can be a valuable option for those processing fewer sales.
  
• Security
  Transactions are encrypted and comply with safety protocols, including Payment Card Industry Data Security Standards (PCI DSS).
  

How to accept payments on a smartphone

Stripe can help you turn your smartphone into a POS to accept card payments.

Tap to Pay on Android or iPhone

Stripe's Tap to Pay turns your Android or iPhone into a contactless reader – no extra equipment needed. Getting started is fast and simple:

1. Open the Stripe Dashboard mobile app.
   
2. Tap the + symbol from any tab.
   
3. Select Charge a card or send an invoice.
   
4. Enter the amount to charge.
   
5. When the Tap to Pay symbol appears, prompt your customer to tap their card on the device.
   

Stripe Documentation provides more details on how to enable Tap to Pay.

Selecting the right platform is key for swift, hassle-free checkout on your smartphone and for supporting the payment methods that best fit your business needs. With the Optimised Checkout Suite by Stripe Payments, you can accept transactions globally – online and in person – boost conversion rates and ensure compliance, saving thousands of hours of technical work.

How much does POS on mobile devices cost?

Now that we've outlined the main benefits of using a smartphone as a POS, including lower costs, let's break down the key charges:

• Hardware costs
  The biggest financial advantage of SoftPOS is that there's no need to buy a physical terminal – you use the payment provider's app on an NFC-enabled device. There are no additional hardware costs.
  
• Licensing fees
  Typically, there are no licence fees, unlike with traditional POS systems.
  
• Transaction fees
  Transaction fees vary depending on the provider but range from 1.5% to 2.5%. Certain companies offer lower rates with a monthly subscription. SoftPOS charges are usually slightly higher than countertop units, but the base expenses are lower. Some waive fees for small transactions, for example, payments under €10 – valuable for businesses selling low-price products or services. Keep in mind that, in Italy, transactions with foreign or non-European Union cards could incur higher charges.
  
• Activation costs
  Typically, there are no activation costs.
  
• Reversal fees
  Providers typically don't charge reversal fees if the transaction is cancelled within 24 hours or before the amount is withdrawn from the account. Some might apply a small flat fee – usually between €0.50 and €1 – for refunds processed a few days later or after they credit the cardholder. Note that the charges from the original sale might not always be reimbursed, especially if the refund happens after the amount has been credited.
  
• Technical support costs
  SoftPOS technical support is almost always included free of charge, generally in-app via chat, email or phone and delivers quick response times. In contrast, legacy POS systems running on physical terminals often require a dedicated support contract, which could be included in the monthly fee or charged separately. If something goes wrong, downtime can be longer and assistance, shipping or replacement of hardware might be necessary.
  

Cost comparison: Smartphone POS vs. traditional POS

How much does a mobile POS cost?

SoftPOS solutions are usually more affordable than traditional portable POS setups. Here are the differences in terms of spending:

• Hardware
  The SoftPOS system doesn't require any extra equipment – it's simply installed as an app on your smartphone. On the other hand, a mobile POS relies on a physical device such as a card reader connected via Bluetooth or a cable, along with the associated purchase and maintenance expenses.
  
• Activation and logistics times
  The SoftPOS model can be widely distributed through instant downloads, whereas a mobile POS could require wait times and logistics for the shipment of the physical terminal.
  
• Setup costs
  A mobile POS often incurs initial activation fees or pricey rental contracts – none of which apply to SoftPOS.