All-in-one, handheld units drive growth

	The PS4000 model from Shanghai Sand is a handheld POS terminal with a touchscreen TFT LCD and Ethernet, Wi-Fi, GPRS or CDMA connectivity.

All-in-one and handheld units are the major trends driving China’s POS systems industry. Boasting convenient and user-friendly operation, these products are widely adopted in the retail sector, including supermarkets and restaurants.

The first type dominates supply, accounting for nearly 60 percent of the country’s total output of desktop variants. Sixty percent of the yield is for exports.

There are about 30 makers providing all-in-one models, nearly half of the manufacturing pool. More new entrants are projected to join the line in 2011 amid growing demand, especially from repeat buyers of POS systems who are now opting for integrated versions.

Citaq Co. Ltd turned out 10,000 units last year, up 20 percent from 2008. Some orders are for the replacement market.

A rising number of releases are expected to adopt touchscreen displays in coming years, following the trend in many electronic products. But as these are considered high-end, only a few manufacturers target the upscale market and concentrate instead on improving the cosmetic design.

Citaq, for one, has set up an R&D team that focuses on enhancing the exterior of its POS systems. The company’s Opoz8000 model, which won Germany’s iF design in 2007, is used in five-star hotels, luxury clubs and residential areas.

In the handheld segment, the widespread adoption of credit or other cards as a mode of payment is spurring demand. The product is now extensively applied in the e-commerce and logistics fields. Wireless versions in particular offer a more secure and convenient transaction method. These have similar functions as corded variants but can connect via GPRS or CDMA, which is less expensive yet faster.

Although demand for noncorded POS terminals is increasing, suppliers mainly cater to the domestic market. This is because China makers started producing the line only recently and barely a few are able to meet international safety requirements such as PCI and EMV. The majority of output is compliant with PBOC, the local standard.

The technology gap with overseas rivals is another factor hindering manufacturers from pursuing foreign trade. PBOC, however, is slated to amend its protocols to integrate international regulations. The move is forecast to boost exports as companies will be obliged to conform to both domestic and overseas safety requirements.

The latest E5 series from Fujian Landi Commercial Equipment Co. Ltd, including the host machines and PIN pads, are all compliant with China’s ISO 7816 and PBOC 2.0. The series also adheres to EMV L1 and L2, and PCI PED 2.0. The supplier has been included in the formulation of new security specifications with PBOC and China UnionPay. The updated standard is expected to be implemented in 1Q11.

With these improvements in safety performance, companies are positive of export growth in years ahead. They anticipate a rise in demand from developing countries that are starting to adopt handheld POS systems and regions such as North America and Europe where the replacement market is strengthening.

There are about 25 makers of such portable configurations in China. The number is expected to remain the same but total output is forecast to increase by 15 percent. Currently, about 20 percent of total yield is shipped abroad.

Products
Components

Desktop and handheld variants are the two main types of POS systems from China suppliers.

The first includes regular and all-in-one models. Regardless of subcategory, low-end units have a CRT monitor, LED display, keyboard, receipt printer and cash drawer. Midrange versions generally have the same utilities but the display may be VFD, and a magnetic card reader and e-bank system support are integrated. High-end varieties are typically keyboardless and use touchscreens instead.

Some manufacturers incorporate extra features for added value. Several releases from Zhejiang Henry Electronic Co. Ltd include a bill counter and currency detector.

Handheld POS systems come in wired or wireless versions. The first is considered low-end and midrange, while the second is marketed as upscale.

Most corded variants support PSTN and TCP/IP. Low-end models adopt a 32-bit Arm9 CPU, 8MB NAND flash and 16MB SDRAM memory, and a 128x64 dot-matrix LCD screen with LED backlight. These have 10 alphanumeric and nine function keys, a thermal printer and an external PIN pad.

The magnetic and IC card readers and two PSAM slots conform to ISO 7810/7811/7812, EMV 2000 and ISO 7816, respectively. Units may also support track 1/2/3 and bidirectional swipe.

Midrange types offer similar utilities except the flash and SDRAM memory are 32MB and 16MB. The thermal printer is high-speed. Some also come with internal PIN pads.

Wireless POS systems integrate all features of wired variants, plus GPRS, CDMA and Wi-Fi connectivity.

Aside from security, R&D in the handheld category is geared toward making operation more convenient. Shanghai Sand Information Technology System Co. Ltd develops models with touchscreen. Some also integrate 3G modules and cameras.

In desktop POS systems, the PCB is the most-important component, accounting for 15 to 20 percent of costs. The majority of mainland China makers outsource the input from Taiwan providers such as Elitegroup.

VFDs, which are adopted in midrange units, take up 5 percent of expenses, while touchscreens used in upscale models share 40 percent. Four- or five-wire types are generally used for the latter. These are 30 to 40 percent costlier than LCD or CRT versions.

This year, prices of desktop POS systems fell 10 to 15 percent due to a decline in outlay for touchscreens. In coming months, quotes are expected to stabilize.

In handheld types, the ICs are the most-vital component and take up 15 percent of costs. These are mainly sourced from Samsung, Lattice and STMicroelectronics.

The printing head is also a key input, accounting for nearly 10 percent of expenditure. As this is controlled by the chip, the two work more effectively when sourced from the same supplier. Most partner with Samsung for this aspect.

With the outlay for chipsets and PIN pads decreasing by 15 and 10 percent, respectively, prices of handheld models declined by 5 percent in recent months.