The Evolution of the Payment Ecosystem

Paymob
July 12, 2021

Different businesses offer a variety of services and products. But, there’s one thing they all have in common—a payment system. You can’t find any business, online or offline, which doesn’t use some sort of Point-Of-Sale payment system to receive money and track sales. These POS systems may vary, but they are an improvement from the days of paper registers and counting cash by hand. 

In this article, we’ll trace the history of POS technology from your regular countertop cash register to the marvellous gizmos we have today, and what the future holds for the payment ecosystem.

The Original Countertop Terminal

In the beginning, there was only the cashier. Cash transactions and payments were done through hired cashiers, who could steal from your day’s earnings without your knowledge. This was so rampant and so frustrating that it pushed a saloon owner from Dayton, Ohio –James Ritty – to invent the first cash register in 1879.

The Ritty Register could count sales but it couldn’t issue receipts and didn’t receive much welcome, so it ended up in the hands of the National Cash Register Corporation (NCR) in 1884.

The NCR added a paper roll for receipts and tweaked certain things, but it was largely mechanical until the 1970s, when electronic registers were invented.

In 1985, IBM created the first PC-based POS system, which was later improved on by Gene Mosher. Mosher introduced the touchscreen graphic functionality.

After this, more variations of the POS systems were released into the market by various companies. And each was smaller and better than the last.

Then came the invention of smartphones which revolutionized POS tech.

The Current Mobile Point-of-Sale (mPos) System 

The American Express made the first plastic credit card in 1959, but these cards were mostly a physical means. Your details still had to be inputed manually. But, in the 1960s, IBM’s Forrest parry invented magnetic strips on cards to store the card owner’s bank info.

The strip enabled you slot a card into a POS machine and pay for your purchase. 

However, with the proliferation of hacks and scams, magnetic strips were bumped aside. EMV payment tech became the new deal. It utilized an encrypted smart chip instead of a magnetic stripe, and was not easy to copy. 

But cards still required a lot of contact and specialized equipment (mPOS) to read them. 

The Pandemic Effect

Before COVID19, companies like Google were already releasing e-wallet features, and some businesses used POS systems that didn’t require you to slide your card through a POS machine. But the pandemic blew those numbers up.

Social distancing measures and lockdowns forced companies to become more creative with the payment options they offered, prioritizing contactless payments over physical ones. 

E-commerce boomed, and so did digital wallets. In fact it is estimated that ecommerce reached an estimated $794.50 billion in 2020.

Cash was no more king, at least not the physical one.

What the Future Holds

As more merchants move to ecommerce to keep their businesses running, it is expected that electronic and contactless payments would grow rapidly. Mobile POS systems with their special hardware and maintenance troubles would be set aside, while NFC and softPOS would come to the forefront. 

You cannot afford to make your payment process rigid and complicated.

And trust us, you do not want to be left out in this historic transition to a fully digitalized world. Join our Paymob family today.