It's difficult to put too much emphasis on what a small start-up such as ShopKeep POS is doing and how it might change the payments landscape. After all, only about 3,000 merchants use its cloud-based point-of-sale system that's supported by Apple iPads and MagTek mobile card readers.

But the New York-based independent sales organization is capturing the attention of companies big and small. Earlier this month, it worked with PayPal Inc. to test that company's mobile-payment system at a movie festival, and today it announced plans to integrate with two other mobile-payment systems, Dwolla and SCVNGR's LevelUp

With Dwolla, ShopKeep POS brings to merchants a low-cost payment option, and LevelUp offers point-of-sale payment acceptance but charges a fee only when customers use earned loyalty rewards

So what makes ShopKeep POS so attractive?

Its size, for one, notes Dwolla representative Jordan Lampe.

"What you're seeing coming out of these disruptive startups is quicker, more direct access and a more powerful feedback loop," he says. "With the entrenched players, their size makes it harder for them to listen and incorporate that feedback."

ShopKeep is one of many companies to tap in to Dwolla's application programming interface. But whereas in many cases Dwolla isn't aware of the integration, it plans to work with ShopKeep as it builds out the functionality, Lampe says.

"They're integrating Dwolla into their service to provide merchants added value," he says. "What's different is we're taking on a more proactive role to see what the market needs."

Chrisina Dorobek, LevelUp vice president of partner development, says mutual client demand led her company to work with ShopKeep. She said in an interview the companies have 30 to 40 merchant customers in common, mostly in New York.

ShopKeep is small enough to be "approachable but not intimidating," while still providing a fully capable product, says Jason Richelson, ShopKeep's CEO and founder.

He would not say whether ShopKeep would first integrate LevelUp or Dwolla, though he said one would be available to merchants by the end of this year and the other by early next year.

ShopKeep plans to "beef up" its application to accommodate bar code scans, which LevelUp uses for payments, Richelson says.

For merchants, Richelson sees the integration as a means to clean up their countertops and to alleviate the need to enter payment information on separate devices, which boosts the chances for errors.

ShopKeep also plans to integrate with other payment types, as well as loyalty systems, daily-deals, marketing and gifts, he says.

Today, ShopKeep's customers are split evenly between retail and simple quick service merchants. It plans to venture into the restaurant/bar market and heavier volume quick-service food providers in the next few months, Richelson says.

"We're seeing a drumbeat here," says Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC. Software-based payment systems are "opening up new payment opportunities like Dwolla, and it's putting pressure on every one of the existing players."

The first companies to feel the impact will be providers of electronic cash registers, such as NCR and Micros, Ablowitz says. Cloud-based processing through an iPad or iPhone is a compelling offer for a retailer upgrading its point-of-sale system, he says.

"Over not very much time we will see new players compete with the Microses and NCRs because it's such a low barrier to entry with cloud-based technology," Ablowitz says. "They might be targeting small merchants now, but you will see some of these companies enter the middle and upper markets, and that will put pressure on Micros and NCR because the price tag is so much lower than the old cash register-style systems."

Ablowitz sees less of an impact on stand-alone terminal companies such as VeriFone Systems Inc., whose GlobalBay mobile service similarly uses iPads to help merchants process transactions. 

And established tech vendors are likely to maintain their grip on their customers for some time, says Gil B. Luria, senior vice president at Wedbush Securities LLC in Los Angeles, disagreeing with Ablowitz on the potential impact on NCR and Micros.

"Any company with an IT department will buy from an IT vendor," he says. "ShopKeep is capitalizing on the fact that the iPad is an attractive form factor, but it is a low-end solution."

The traditional stand-alone terminal market, however, gradually will diminish, Luria says. "The more these companies integrate the less important the standalone terminals become," he says.

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