Last week RSPA held its annual RetailNow conference in Dallas, Texas. In terms of brick and mortar technology, it’s probably THE conference to attend. It has a healthy mix of technology providers and their distribution channels. Lacking would be the end merchants themselves, though there are shows for that (and I truthfully lament anyone going direct).
Throughout the show I heard several rumblings, and now that the show’s over I can objectively attest that my own observations confirmed industry gossip.
The first observation is that there is no coming generation of POS reseller (VAR). There are a very small number of family dealerships that are transitioning ownership to the next-generation family member, but there are many more that could not find someone to take the reins. One VAR professed the amount of cajoling he lathered upon his son only to be rebuffed.
Tom Elliot of POSjobs.com, who places people in the POS industry, confirmed these observations at a broader scale. “It is financial…” Tom sees many of the next generation coming into the industry through payments and starting their own Independent Sales Organizations (ISOs). Which leads me to my next RetailNow observation.
POS is becoming payments. Last year there were ~10 processors that exhibited at the show. This year, by my count, there were 25. There may even be another handful that attended silently. Payments companies make substantially more money than POS companies, and one need only follow the money to see how this plays out.
Payments is dipping in the POS waters to reduce churn in its core processing business. They’re now either closely partnering with, buying or building their own POS systems.
If nothing else the sheer scale of the payment sales forces means that more merchants will first learn about POS from a payments provider rather than a traditional POS VAR.
How else do you think First Data’s Clover has grown into more than 40,000 merchants in under 4 years while legacy POS companies are lucky to grow 1,000 merchants per year? If you think the lines are blurring today, wait until data markets come to fruition.
What can we infer from these observations? Nothing that we haven’t discussed previously.
- POS will be sold online via SEO with help from payment referrals.
- VARs will become a rare sighting as the money in legacy POS dries up. The ones that survive will focus on larger accounts and consulting services.
- POS software becomes more stable, allowing remote diagnosis and repair. Hardware can be drop-shipped and delivered in under 24 hours. Merchants that need faster/better support will pay for it but they will only be merchants that are less price sensitive (think revenues > $1M/year).
- Payments will swallow POS over the next decade, especially when the unit economics of data get proven out. Follow the money!