How the Spread of Digital Payments Is Driving Online Links for Remote Devices

The increasing penetration of digital payments worldwide is helping drive conversion of point-of-sale terminals, vending machines, and parking meters from standalone devices to connected machines, according to a report released Tuesday by Berg Insight, a Gothenberg, Sweden-based research firm that follows the wireless market.

Worldwide, Berg forecasts the number of so-called cellular M2M (machine-to-machine) connections in the retail industry will grow from 23.1 million now to 44.3 million by 2019, a compound annual growth rate of 13.9%.

“Cellular M2M technology enables devices such as POS terminals, ATMs, digital signs, and ticketing machines to be used at new locations where fixed-line connectivity is unavailable or impractical,” says the research firm in a news release about the new research. “The technology has a more transformational effect on markets such as vending and parking, where machine operators need to reorganize their operations in order to benefit from the availability of real-time information.”

In North America, the increasing installation of connected parking meters will drive growth from 220,000 such devices at the end of 2014 to 580,000 within five years. Most new multispace meters are already connected, and now more and more single-space machines are getting hooked up, says Berg.

Much the same growth story is true of vending machines, which have become a key target of mobile-payments services such as Apple Pay. Online connections have also become important in this market to gather sales data remotely from the machines. There were 560,000 vending machines in North America with cellular connections at the end of last year, a number Berg predicts will grow at an annual rate of 18.9%. That’ll be good for an installed base of 1.3 million connected machines by 2019.

But it’s POS terminals that account for the vast bulk of connected devices, accounting for 90% of all cellular M2M connections in the worldwide retail industry (Berg Insight would not break out North American data for these devices).

This is not, however, a big growth market. “The market for wirelessly connected POS terminals is … relatively mature, and most of the market growth is driven by the increasing use of electronic payments in emerging markets,” notes the release.