Stripe expands smartphone payments to almost all devices

Stripe is attempting to expand its payments reach inside stores by not requiring a dedicated point-of-sale device. 

Last week, the payment company began supporting tap to pay for Android following an earlier launch on iOS in 2022. Tap to pay, also referred to as softPOS, allows merchants to accept contactless payments without add-on hardware, enabling most smartphones to serve as DIY card terminals.

Adding Android support for softPOS allows Stripe to cover more bases as payment fintechs, processors and card networks try to simultaneously address merchants' needs inside stores and in digital channels.  

"Merchants want a unified experience, and to meet consumers wherever they are, digital or in-store," said John Affaki, Terminal business lead at Stripe. "The word 'omnichannel' may be buzzy, but the use case is real."

Adding softPOS support on Android enables Stripe to cover nearly 100% of the global mobile operating system market. Android alone has a 72% share, according to BankmyCell, with iOS coming in at 27.5%. Contactless payments were 54% of all Stripe Terminal transactions in 2022, and the iOS and Android updates allow Stripe to extend its reach by enabling merchants to use technology they likely already have. 

"This replaces the typical reader on a countertop," Affaki said. "It's another option. The merchant can use a dedicated terminal, hardware or an off-the-shelf consumer device to accept payments. They can use whatever they have in their pocket."

Stripe also debuted several other products last week, including Enhanced Issuer Network, which provides risk scores to mitigate fraud. The company expanded its card account updater tool for American Express accounts, and added about three dozen countries to its network token service. Network tokens are payment credentials that apply to a specific card-merchant pair and can be used as a substitute for a card user's primary account number. 

These product additions are designed to increase Stripe's value-added services in a market where lots of payment companies are doing the same, particularly to reach small businesses that are concerned about the impact of a potential recession. 

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Payment companies such as Adyen and Revolut, for example, have added in-store payment technology to accompany online services. Revolut Pay is a single-click option for e-commerce merchants, while Revolut Reader is designed for in-store payments, enabling the London fintech to sell products to both merchants and consumers in multiple channels. Revolut did not provide comment on softPOS for this article. 

Stripe's original business was enabling merchants to sell online. By supporting in-store payment technology, it can connect that part of its business to physical purchases. 

"SoftPOS can be a bridge for Stripe to be a point of sale device processor," said Marco Salazar, director of payments for Javelin Strategy & Research. 

Block offers softPOS on iOS and is reportedly working on support for Android. Block did not provide comment by deadline. Adyen has also been an early mover on Apple's tap to pay. Adyen's work with Android includes integrating application programming interfaces from equipment manufacturers to read card data and communicate with Adyen for payment processing. Adyen did not provide comment on potential Android softPOS for this article. 

"It's important for a merchant to be able to use whatever device they want, whether that's iOS or Android," Affaki said. "That's more important than a decision between iOS or Android." 

While it's still early in softPOS' development, the technology is starting to gain traction globally and the category accelerated quickly after Apple announced its tap to pay offering about a year ago, according to Thad Peterson, a strategic advisor for Aite-Novarica.    

"Enabling contactless payments through a standard consumer smartphone opens card acceptance to a wide range of merchants who might otherwise not accept card payments," Peterson said. 

SoftPOS also frees small merchants from the need to purchase incremental hardware to accept payments, which lowers the merchants' overall acceptance cost, 

"Merchants with any type of smartphone can now use their devices to accept payments," Peterson said. "And, since Android is the dominant global mobile platform, it dramatically extends the market opportunity for Stripe," Peterson said.  

Stripe also offers softPOS to merchants on the Shopify platform. "This announcement positions them well to be competitive in a rapidly growing payment acceptance category that democratizes payment acceptance," Peterson said. 

SoftPOS is seen as a potential bridge to checkout-free retail, in which cameras or similar technology capture consumer purchases, then automatically charge that consumer's e-commerce account. 

Checkout-free retail, which is most prominently offered in Amazon Go stores, is expected to provide a trove of actionable data while potentially rendering the point of sale obsolete. But the innovation has proven difficult to deploy at larger retailers. Affaki views checkout-free retail as a companion to other new payment innovations, such as softPOS or biometrics, rather than a replacement.  

"There will always be a need to accept a payment in the store, so tap to pay will live alongside checkout-free," Affaki said. "Maybe years from now it may be a different story, but it's a long way off."