More independent sales organizations are offering personal computer-based point-of-sale systems to merchants, insiders report.

“ISOs are reinventing themselves as POS (system) providers now,” notes Andy Chau, president and CEO of Pax Technology Inc., a terminal vendor based in Melville, N.Y. “It’s becoming the trend.”

Just how many ISOs have taken up selling POS systems is unclear. Taking a “shot in the dark,” Bryan Daughtry, vice president of sales and marketing for Hackensack, N.J.-based POS vendor Up Solution LLC, estimates that 20% to 30% of ISOs now offer POS systems.

That estimate seems high to David Fish, senior analyst at Maynard, Mass.-based Mercator Advisory Group Inc. But the number is increasing, he says.

“The market not well-penetrated in the ISO space,” Fish maintains.

Whatever the exact numbers, the growing, but still relatively small, number of ISOs offering such systems means they still offer an opportunity to outshine competitors, observes Daughtry.

However, ISOs that fail to get started in the POS-systems business in the next couple of years will find themselves falling behind the industry’s mainstream, he contends. POS systems soon will reach a “tipping point” and become a common offering, he says.

Meantime, providing a merchant with POS equipment and software can make it difficult to switch to another ISO for card-acceptance services, Fish says.

“The goal for ISOs is retention,” Fish says of POS systems. “The stickiness factor increases quite a bit.”

When ISOs integrate card transaction processing with system software and POS hardware that includes electronic cash registers and peripherals, such as printers and customer displays, the merchants cannot take their business to another ISO without buying new POS equipment or at least reprogramming their POS system, Fish says.

If a merchant is using an ISO’s POS system and still decides to change card-services providers, the need for reprogramming alerts the ISO to the situation, notes Daughtry. That situation also gives ISOs an opportunity to charge merchants a reprogramming fee that can range from reasonable to costly, he says.

Moreover, when an ISO has no involvement with the merchant’s POS system, it may not notice the merchant has left until seeing the transactions suddenly drop to zero, Daughtry notes.

In a merchant’s eyes, offering POS equipment and software also elevates an ISO or agent, transforming the acquirer from a card-services pitchman (or woman) to a business consultant, observers agree.

And any edge ISOs can gain will help them survive in a harshly competitive market, says Jared Isaacman, CEO of Harbortouch, an Allentown, Pa.-based ISO and POS-systems supplier. He likens the rivalry among ISOs to “a knife fight in the streets.”

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