Technical and Regulatory Prerequisites for Blockchain-Enabled Point-of-Sale Systems: A Tanzanian Case Study

Abstract

The continued expansion of digital payment technologies has encouraged Tanzanian district councils to use Point-of-Sale (POS) systems to collect service fees. In current POS systems, authorized POS terminals capture payment details, and through the centralized server, transactions are recorded on the POS database, with receipts printed as confirmation. Although this architecture supports recording and monitoring transaction revenue, it provides limited support for verifying the identity of the actor authorizing the transaction and for independent confirmation of transaction integrity during auditing. To address these limitations, this study investigated the essential requirements, standards, and protocols for integrating a Self-Sovereign Identity (SSI) as a blockchain-based identity solution with existing POS systems and for using a permissioned blockchain platform to verify integrity. To achieve the study objectives, an exploratory qualitative approach was used, involving 32 semi-structured interviews with POS operators, revenue accountants, internal auditors, Information and Communication Technology (ICT) administrators, a regulator, and blockchain experts. A hybrid deductive–inductive thematic analysis was used to establish three requirement themes, namely, security and identity management, legal and regulatory compliance, and data management and integrity assurance; two standard themes, namely, security and cryptographic standards, and identity and decentralized identification; and two protocol themes, namely, security and user authentication protocols, and data management and identity portability protocols. The findings were mapped to applicable legal obligations, compliance standards, technical specifications, and implementation controls, indicating how these requirements were translated into the conceptual SSI-POS integration for district-council POS systems. The proposed solution separates credential issuance, credential holder, and device POS management; verifier and POS transaction processing; blockchain and integrity evidence; and the assurance domain across defined trust boundaries. After a signed transaction is approved by the verifier, a complete transaction receipt remains in the existing POS database, while receipt hashes or the corresponding Merkle roots are anchored on the permissioned blockchain to provide tamper-evident verification. Hyperledger Besu with Quorum Byzantine Fault Tolerance (QBFT) was selected for its fit with permissioned, multi-organizational governance and for independent replication of receipt-hash evidence. The study provides a stakeholder-derived, regulatory-aligned conceptual foundation for SSI-POS integration without replacing the existing POS system workflow.