Payment Infrastructure Market in India Sets for Huge Makeover

 Indian point of sale (POS) terminal market has grown up to worth INR 2.15 billion in 2015 and is poised to reach INR 3.86 billion by 2022 aided by unprecedented demand triggered by government’s move to open millions of bank accounts with ATM/debit/credit card facility, according to an analysis by the leading international research firm, Frost & Sullivan.

 

With government opening up banking sector to rural folks, India’s payment infrastructure is set to witness an explosive growth, and the country, which is presently the 13^th largest plastic economy in the world, has a great potential to scale up the ranking as more retail businesses are being introduced to PoS systems.

 

The study by Frost & Sullivan titled - Analysis of the Indian Point-of-Sale Terminals Market -says that India, with 35% of population presently having bank accounts, will also witness a huge demand for wireless POS terminals owing to less complexity and ease of use.  The wireless PoS terminal market is growing rapidly and will surpass wired terminals by 2022, the study said.

 

The researchers however felt that India’s payment terminal market though growing at a faster pace than its South East Asian peers, its penetration and usage was much less compared to Western counterparts. This is primarily due to a wide gap between the number of plastic cards issued against the number of installed PoS terminals and reluctant to adopt POS terminals by small and medium business establishments.

 

"In order to introduce banks to the huge population in India, private and nationalized banks should play a key role in rapidly expanding their operations across all tiers of cities," felt Aiswarya KG, Frost & Sullivan Electronics and Security Research Analyst, who further added that there should be a concerted effort to create awareness on security of bank accounts and transactions which will change customer sentiment and promote cashless transactions.

 

In India, PoS terminals are widely used in Tier-1 cities while Tier-2 and Tier-3 cities are catching up gradually. Projects such as Jan Dhan and Micro ATMs are upping the usage of PoS terminals in rural areas.  Also, the recent introduction of chip-plus-pin authentication provides double security advantages for consumers making transactions through cards.

 

The accelerated growth of cashless transactions using credit/debit cards by e-commerce websites are surely going to make a dent on POS terminal market, the report felt, which further added that though card-on-delivery is gaining momentum across major cities, online transactions have gained the lion’s share in the digital transactions.

"Interestingly, more than 80 per cent of retail businesses in India still do not have a PoS terminal as they do transactions through traditional means. With the present government pushing cash-less transactions across the nation, there will be more adaptation for plastic currency, with card issuers, banks and retailers offering value-added services for card holders,” says Nirupama Sridhar, Founder and Director of Payment Connect, a B2B space dealing with POS terminals, barcode scanners, receipt printers, barcode printers, hand-held terminals, to name a few.

How POS Systems Become Easy Target for Data Hackers

 With digitization and cash-less transactions becoming the norm of life for Indian shoppers who invariably use credit or debit cards and UPI/online transactions for buying things through line shopping sites or POS terminals installed at mom-and-pop stores, should be more careful as with every swipe of their cards or voluntary disclosure of personal data, they are putting themselves at great risk of losing hard earned money to the unscrupulous data miners.

Vulnerable POS Terminals

With innumerable number of shopping malls and other retail enterprises storing sensitive personal data such as credit/debit card information in their backyard, data pilferages can be effectively carried out by professional hackers who can plant suitable malware in POS systems if retailers do not have secured and highly effective firewalls to protect such unauthentic external intrusions.

But the reality is worrisome. However strong anti-malware tool one may have, people can still find ways to extract personal data from the POS systems without being caught. According to a recent analysis by a leading American retail software analytical firm, even from top ranking American malls such as Home Depot, Target, Sonic and Whole Foods, to small grocery and brick-and-mortar stores are unsafe and un-secured.

Despite many best practices, POS system breaches continue to worry customers and retailers. The presence of huge debit/credit card data makes POS systems an attractive and profitable place for malware planters and hackers. Retailers need to strengthen their system with the latest technology by fortifying their systems against the possible malware threats.

How to strengthen POS systems

 

The raise of credit card and digital payment has made more retailers discarding traditional cash registers and opt for new, advanced POS system which runs suitable retail POS software and has hardware components such as cash drawers, touch screen monitors, POS receipt printers, barcode scanners, barcode printers, label printers, pole displays, to name a few.

Restaurant, Retail and Hospitality businesses, among retailers, predominantly use retail POS software to execute sales quickly, monitor sales data, cash flow, manage inventory and other related analytical activities.

"Organized gangs are so well equipped that they can easily overrun any restaurant and hospitality point-of-sale system in India. Even the much advanced US retailers are struggling to keep their customer data secure. It is worrisome that we have still not made our POS systems strong enough to thwart any possible attacks by illegal data extractors or malware intrusions," says Karthik Anbarasan, a software analyst who has expertise in retail software business.

POS Becomes an Easy Target

When compared to other cybercrimes, stealing card data from POS systems is the easiest to monetize. Once a POS system is compromised, hackers sell sensible personal data to card shops or any underground forums, informs an analyst from FireEye, a cyber security agency.

 

Hackers, apart from stealing card numbers and PIN, also extract sale transaction details with personal email IDs, names, addresses and zip codes. So, how to protect POS systems from malware attacks?

Attackers need just a small opening to enter and execute their wicked plan. And this small gap, more often than not, is made due to overlooked details, human errors or failure to update the system.

How to Prevent Data Theft

 

So, the onus is on retail businesses to follow all basic protection exercises and protocols such as training employees, updating systems, finding risk factors and closing the vulnerable lose ends to reduce the risks.

Network segmentation is one of the proven ways to limit malware threats, as it separates the business network from the card data storage locale linked to POS systems.

As systems are not connected together, retail businesses can lessen the threat perceptions of losing sensitive customer data.

For customers, they should not use their cards where they feel that the POS terminals are unsecured and also keep changing their PIN as often as possible.