A comprehensive guide to cellular connectivity for payment terminals

Point of sale (POS) systems facilitate financial transactions in various sectors worldwide, such as retail, hospitality, banking, healthcare, and public services. POS systems have evolved from traditional cash registers to modern cloud-based platforms incorporating fintech innovations, enabling mobility and even cryptocurrency payments, among other benefits.

The adoption of cloud-based POS enables payment transactions through several forms of payment devices, including tablets, smartphones, handheld terminals, and non-mobile all-in-one payment terminals.

With the growing adoption of electronic payments, cloud-based POS systems add several values: updates are faster, data is available on demand, data and devices are more mobile, and POS platforms are customizable and device agnostic.

A modern POS system entails a smart device capable of executing payment transactions, a platform to record and collect payments, and stable connectivity to ensure real-time updates. Other than connectivity, payment service providers tend to supply these elements as an all-in-one solution for their clients.

A significant challenge for payment service providers is ensuring connectivity, a small but critical component of the system. Payment service providers need to choose a connectivity service suitable for their ecosystem. This article discusses different connectivity solutions available to payment providers and merchants of POS systems and emphasizes cellular connectivity as the most effective solution.

Choosing the right connectivity

Legacy POS devices may use on-premises servers or have no form of connectivity and operate in a closed internal network. Such setups can increase data management costs, hardware dependency, risk of data loss, and installment costs. On the other hand, cloud POS offers higher security as data is stored online in an encrypted format backed up by strict regulations. The core benefit of cloud-based systems over legacy systems lies in the online updates, which give them the flexibility legacy systems cannot afford. Therefore, it is imperative to have a seamless connectivity solution that enables successful online updates.

Cloud-based POS systems require cloud connectivity for real-time data transfer, device monitoring, and updates. POS devices usually use LAN, Bluetooth, WiFi, or cellular. LAN may be applied to desktop POS systems that support ethernet cables, while short-range wireless connectivity such as WiFi and Bluetooth are common for handheld payment terminals. Cellular connectivity provides more flexibility and stability and is the best choice for handheld terminals and mobile POS. For most POS devices, cellular also serves as a failover when other technologies are unavailable.

The choice of connectivity depends on the types supported by the POS device. Some legacy devices are LAN-based, while some stationary systems, such as the Windows-based integrated POS Verifone IX90, combine Ethernet LAN, Bluetooth, and/or WiFi connectivity technologies.  

Relying on Bluetooth-only connectivity is a non-scalable solution, as you’ll be restricted to a small area to utilize connectivity. Both Bluetooth and WiFi are prone to security issues due to their open accessibility. WiFi connectivity may experience interference from electronic devices or become too congested from usage. WiFi is also prone to instability, which may disrupt POS service. This is especially true for countries that may experience frequent WiFi interruptions due to power outages. Such challenges make Bluetooth and WiFi non-resilient connectivity options.

Payment service providers and business owners tend to prefer more robust solutions, using cellular as the main source of connectivity or as a failover to preexisting technologies, especially WiFi. This is common for handheld devices and preferred by small businesses due to the flexibility it offers. Cellular networks cater to the needs of time-conscious sellers who deal with time-conscious consumers. It enables scalable and easy deployment as well as mobility for POS devices.

How cellular connectivity helps

Cellular connectivity is essential for POS service providers to integrate with their existing setup and provide reliable services to their clients. Unlike consumer mobile connectivity, where end users can get off-the-counter solutions, POS service providers need to tailor cellular connectivity to fit into their overall POS ecosystem, including the platform and devices. Merchants and end users value a complete solution where they don’t have to source various elements of their POS system to create a whole. This is especially true of larger deployments that demand a centralized management hub for connectivity and other aspects of the POS system.

SIM cards make centralizing your connectivity management more feasible because the configuration will be the same regardless of the merchant or location. A centralized system allows businesses to conduct transactions in various locations without being wired to a fixed point-of-sale system. For instance, all the associated SIM cards may have the same APN, meaning all the POS devices can be preconfigured before deployment. Providers can also procure suitable mobile connectivity based on the device specifications, such as the radio access type (5G, 4G, 3G, or 2G), the supported frequency bands, etc. Thus, cellular connectivity ensures a seamless and reliable transaction experience for businesses.

Using a global M2M SIM for more resilience

The limitation of single-network consumer SIMs, typically used in phones, is the inconsistency of network signals. Consumer SIMs are at the mercy of their mobile internet service providers (ISP), depending on them for network coverage, radio access type, throughput, etc. If these factors are not met, they may disturb the stability of POS connectivity. Furthermore, some cellular networks are prone to instability in remote areas due to being far from cell towers. So, merchants who operate away from urban areas are more likely to experience unstable connectivity.

The solution is a multi-network or multi-carrier IoT SIM, also called a global roaming SIM or M2M SIM. These names are used interchangeably but refer to the same roaming SIM card capable of automatically switching between local networks/ISPs based on their signals. The device detects and evaluates network signal strength and connects to the network with the best signal.

Another important aspect to consider is how the device switches between networks. We recommend choosing a non-steered SIM, which doesn't prefer predefined networks but automatically chooses the best one.

Here are some of the benefits of using IoT/M2M SIMs:

1. Resilient connectivity: M2M SIMs offer an extended list of roaming networks so devices can connect to the strongest signals in different locations. This allows you to avoid challenges caused by local network outages.
2. Scalability: Thanks to their roaming capabilities, M2M SIMs can be used globally. Therefore, payment providers can use identical setups for their devices before deploying them. 1oT, for example, offers one source for everything: technical support, invoices, and a platform for managing all SIMs.
3. Value-added services: Connectivity management platforms are full of tools that simplify full-scale SIM management.
4. Enhanced security: M2M SIM providers like 1oT can provide network security in different forms, such as establishing private mobile networks (PMN), which are a prerequisite for the Payment Card Industry Data Security Standard (PCI DSS) certification.
5. Cost-effectiveness: M2M SIMs reduce the cost of working with multiple telcos globally and installing SIMs with different carrier configurations.

Future-proofing POS connectivity from the get-go

While IoT SIMs give users access to the features mentioned above, they also have their weaknesses. They still depend on a global roaming SIM provider for all technical issues.

That is why an eSIM/eUICC is a more bullet-proof solution. In simple terms, eUICC is a collection of several telecom profiles on a single card, where each profile represents unique global roaming footprints by different telcos. eSIM’s ability to switch between telecoms makes you more independent from SIM providers, thus future-proofing connectivity and enhancing scalability.

POS connectivity data consumption

POS terminals collect large data sets, from transactional information such as time attributes and payment methods to inventory data. The data can be recorded in real-time or downloaded in bulk.

POS mobile data usage generally depends on the update frequency, data size, and data type. Most POS transactions are text-based, so an average transaction will consume 1-50 kb of data, depending on the number of characters. Online card payment authorization may require a few hundred bytes of data. High-velocity POS will ultimately consume even more data since they have more transactions to record.

Android POS terminals tend to use more data due to periodic firmware and OS updates, which demand megabytes of data. The best practice for Android POS is to utilize only the POS software while external apps are blocked. This is also a basic security measure.

Handheld and payment terminals in public transportation and vending machines may consume 20-50 MB of data monthly, depending on the overall traffic. We reviewed the average monthly data consumption of several companies for different use cases. The summary is shown in the table below.

Things you should know about SIM connectivity for POS terminals

Choosing the right POS hardware for resilient connectivity

1. Ensure that your device supports the frequency bands provided by the local operators in your deployment countries. Android POS may not require such verifications as Android OS is compatible with most bands.
2. Ensure your device supports the available radio access types (RAT), such as 4G and 3G. Some technologies, like 2G and 3G, have been phased out in some countries.
3. Ensure the POS has a user-friendly interface – for instance, to switch between roaming networks for troubleshooting.
4. The POS platform/OS should comply with all the necessary requirements, such as the PCI DSS Compliance.

Choosing the right connectivity management platform (CMP)

1. Look out for basic functionalities, such as naming, grouping, and tagging of SIMs, suspending and limiting data consumption, and evaluating data patterns.
2. Look out for troubleshooting capabilities, including network sessions, SIM activities, and so on.

3. Look out for API capabilities to integrate the CMP into your existing device management platforms.

What makes a good cellular connectivity provider?

1. Multiple strong telecom partnerships for added flexibility
2. Technical competency and support to troubleshoot and identify issues
3. In-house engineering – the provider won’t need to rely on third parties to maintain and improve their service

4. Speed – self-service flexibility and quickness in resolving issues

How to ensure your device’s security:

1. The POS system should comply with recognized certifications for payment providers and cybersecurity.
2. Providers in Europe and North America should comply with GDPR and CCPA regulations for data privacy.
3. Avoid sending encrypted data over the public internet. It is common to set up a private APN and create required IP rules on the network.
4. Prevent service misuse by allowing only the required URLs on modern touchscreen payment terminals.

5. Lock POS hardware to their respective SIMs to prevent misuse using the IMEI lock function.
   

You can get more tips on increasing your device’s security from this blog article.

How 1oT can help you

Many payment providers have reached out to 1oT to help them with at least one of the following:

• Overall reliability of connectivity
• Connectivity security

• Customized connectivity

At 1oT, we help payment providers create stable and scalable connectivity systems. We have 12 different prenegotiated carrier deals that allow flexibility for regional offers. Our M2M eSIM includes 5 ready-to-use telecom profiles, and we offer an award-winning self-service connectivity management platform with 100% uptime on the client’s UI and API.

1oT is also a certified subscription management (SM) service provider for SM-SR, SM-DP, SM-DP+, and eIM, enabling us to offer solutions based on M2M eSIM, consumer eSIM, and soon, the IoT eSIM (SGP.32).

Our experienced team can give you technical consultations and support when you’re deciding which hardware to choose or already have experience with POS systems but want to change connectivity providers.