Independent sales organizations looking to compete against free-terminal programs and to boost their profit margins may turn to Asia-made point-of-sale terminals.

Beginning earlier this year, such companies as Pax US, a unit of Pax Technology Ltd.; Blue Bamboo; and Spectra Technologies Holdings Co. Ltd., all based in China, and Taiwan-based Uniform Industrial Corp. increased their efforts to reach U.S. ISOs and their small-merchant customers.

Charge Anywhere LLC, a South Plainfield, N.J.-based wireless-payments company, has liked the Spectra POS terminal it began selling about a year ago. “We have deployed more than 2,000 Spectra terminals in the last 12 months,” Paul Sabella, Charge Anywhere president and CEO, tells PaymentsSource. “We chose it because of the price advantage.”

Charge Anywhere can buy a Spectra terminal for as low as $399. Tasq Technologies, a Rocklin, Calif.-based POS-equipment distributor, in March sold a comparable device from VeriFone Systems Inc., the Vx 610, for $631.

Similarly, David Leppek, president of Transaction Services LLC, a Newark, Del.-based ISO, was attracted to the price of Pax terminals. Leppek says he can buy Pax S80 terminals for $165 each in bulk orders.

Having a POS terminal available at such a price helps his company compete against other ISOs that offer merchants no-cost terminals, Leppek says. “We don’t want to give away the terminal,” he says.

To succeed, Asia-based POS-equipment makers will need to work hard to penetrate the ISO market, says Gil Luria, vice president of equity research at Wedbush Securities Inc., a Los Angeles-based equity research firm.

“They will have to compete based on price and convince ISOs that the lower prices compensate for the risks associated with using a new supplier,” Luria tells PaymentsSource. “Even the global market leader Ingenico has had a challenging time convincing ISOs to take a risk on its products, so I would imagine that bar is even higher for Asian suppliers.”

Lower manufacturing costs are an advantage for the Asia-based companies, but that could change, says George Sutton, senior research analyst at Craig-Hallum Capital Group LLC, a Minneapolis-based investment firm.

“The challenge we do see for these vendors (particularly the POS vendors) will be the effective erasure of a competitive advantages as other major vendors are now building their products in China as well,” he says.

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