Harbortouch is continuing its transition from an ISO to a hybrid that manufactures point-of-sale systems as well as promoting card-transaction services.

The Allentown, Pa.-based company still functions as an ISO and has been manufacturing and programming POS systems for two and a half years, says CEO Jared Isaacman.

“I take my hat off to the entire team here,” Isaacman tells PaymentsSource. “A company that’s been around 13 years doing the traditional payment-processing bit, programming credit card terminals, processing sales, doing risk management … and then transforming ourselves into an organization that builds touch-screen POS systems and programs them.”

The company’s employees aren’t just programming card acceptance into payments terminals these days, he emphasizes. Now, they’re programming POS systems to handle everything from buffalo wings and steaks to inventory control and stock replenishment.

Those employees deploy, install and support POS systems, while also training merchants how to use the equipment, Isaacman says. Technicians around the nation, all experienced with POS and telephone installation and maintenance, help with setup and repair, he notes.

At the same time, the staff has continued to refine the POS systems’ software, expanding from general retailing and hospitality to add specialized capabilities for convenience stores, liquor stores and restaurants, he notes, adding that the systems even help with reservations and gives business owners remote access to their electronic systems.

Meanwhile, hardware offerings also have advanced with the introduction of a new generation of equipment, Isaacman says. The company offers Classic and Elite lines.

Some of the POS hardware manufacturing takes place abroad, but programing and final assembly take place in Allentown, he says. Nearly everyone at Harbortouch has some involvement with the POS business, and about half of the 300 employees are dedicated to POS fulltime.

As the transformation has unfolded, the company began referring to itself by the name of its POS systems, Harbortouch, and stopped using its former but still official legal name, United Bank Card.

The company markets the terminals as free, but charges $59 a month to maintain the Classic line and $69 to maintain the Elite line, a cost Isaacman compares with a monthly cell phone bill for a full POS system.

The equipment performs the same functions as systems retailing for $5,000 to $10,000. That savings can mount up for a merchant with three systems, he says.

Harbortouch benefits by using the POS systems to sign up and retain merchants with higher-than-average transaction volume, Isaacman says.

“The whole logic behind it is the long-term, recurring revenue prospects from the merchant accounts, so, naturally, it’s only offered through our sales channel,” he notes.

Their sales channel includes only the Harbortouch inside sales staff and ISOs affiliated with Harbortouch. The company signs about 90% of its merchants through ISOs and uses its own staff only in parts of the country that its ISOs don’t cover.

About 1,000 agents from its ISOs have taken a course that consists of about 400 online slides and a test that teaches how to sell the system. An additional 500 agents have spent a week at the Allentown offices to become certified on the software.

To receive the POS systems, merchants sign a five-year service agreement and a three-year merchants-account agreement.

“I would say that’s an average-length term,” Isaacman says.

The company is shipping about 1,000 POS systems a month, sending them to approximately a third of its new merchants.

“We hope at some point to be 50-50 or even 75-25,” in favor of POS systems, he says. “Our business is POS now, and we want to continue to march in that direction.”

Of the company’s 115,000 merchants, about 17,000 are using the free POS systems, Isaacman notes.

The merchants that receive free POS systems process four times the transaction volume of the average merchant in the portfolio, but inactive or seasonal merchants skew that figure. The free-POS merchants probably have closer to three times the business of those without them, he estimates.

Those higher numbers for free POS merchant result because the POS systems help them run their businesses and they become more committed to the machines.

“They’re higher-quality merchants,” Isaacman says.

Although the high cost of offering free POS systems creates a barrier to entering the market, he expects that competitors will arise eventually but not necessarily anytime soon.

Still, Isaacman keeps moving on to new approaches to acquiring. Many consider his company the first to offer payments terminals for free, beginning in 2004, starting a practice that’s now widespread. In 2007, the company began reselling POS systems, a step that led to today’s manufacturing operation.




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