Perhaps our favorite outcome from writing these posts is that we get to learn from people that know substantially more than we do. Thus far we’ve mostly discussed payments/POS dynamics in the US markets. Since there is a world outside America, we thought we could learn from someone abroad and write about that.
Nobly is one of the major cloud POS companies serving the European markets – though in Europe cloud is traditionally marketed as EPOS (electronic POS). Others in the European market are Intelligent POS,Orderbird and iKentoo. Nobly’s co-founder, Sebastiaan Bruinsma, spent some time with us to tell us how he sees Europe playing out.
Sebastiaan makes it clear that Europe is a few years behind the US. He says that US cloud POS companies like Revel and Shopkeep might have been Europe’s (or at least the UK’s) initial exposure to the concept of cloud POS. Revel and Shopkeep were founded over five years ago and began penetrating the EU with serious brand dollars two years later. By contrast, the European cloud companies may have started in 2012 but were mostly tinkering with the idea of cloud at those stages.
Just like the market played out in the US, smaller European merchants first embraced the idea of cloud. “Independent merchants were the first to catch on, with larger chains making cloud part of their strategy over the past 24 months,” comments Sebastiaan.
Another notable disparity is this “issue” of features. In the US, legacy systems love to trumpet their features. Features are but operating system nuances cobbled together over decades of customization for one-off merchants.
Sebastiaan says he’s never had to worry about such complaints across the pond. “Our customers have never had issues with the ‘not enough features’ argument that plagues US cloud companies.” Does that mean that Nobly has built a more robust feature set than US cloud companies, or that European merchants prioritize the value of cloud over a scoreboard of features? You decide.
Outside the North America independent restaurants are more common. This is a chart of restaurant traffic from Statista that proves the point.
As markets skew more “mom-and-poppy” they become less comfortable buying solutions from third parties in a foreign, distant land. But that’s not to say that they won’t buy solutions from someone doing inside sales in their homeland. Sebstiaan notes that Nobly, “Rarely does in-person installs. The systems are so simple to set up these days that we can mail our solution to a customer and they can set it up without much trouble.”
“But,” he notes, “having a local office makes a huge difference. Customers here want to validate solutions first-hand, and that means they put a real emphasis on local support.” Accordingly, Nobly was the first POS company to have a direct communication system with merchants. Using live chat, Nobly troubleshoots issues much faster than traditional “24/7 email support” and has become the highest rated POS system on Trustpilot.
But perhaps the biggest difference is payment company involvement.
Unlike the US dynamics, payments companies are doing very little in the POS markets in Europe. Few POS companies are getting any payments referrals today.
Why such a stark difference from the US, where payments companies are going so far as to buy POS assets? Speaking with several payments partners has helped us craft a few theories.
1. Hefty regulation. Europe has put a ceiling on processing fees as part of the Intercahnge Fee Regulation, dampening innovation in the market. The result is fewer new products in the market and a reluctance to move cloud POS.
2. Creation of the Single European Payments Area (SEPA) triggered consolidation. Processors had to heavily invest in new platforms to meet international rules and the only way to survive was with large market share. This could shift focus to market consolidation and not new product development.
3. Merchant acquiring earns 25% of the revenue as issuing does, due to additional requirements of servicing, billing, etc. Thus banks are outsourcing their acquiring business. With less money for acquiring, businesses focus on other efforts.
4. EMV regulation has created a reason to revisit POS hardware domestically. In the EU, EMV has been in-market for 12 years. Acquirers already make good money on their hardware and don’t need to replace it.
5. VAT and high taxes mean merchants prefer cash to traceable cards, leaving little incentive to use a forensic cloud POS.
Sebastiaan shared his own thoughts. “In the US, merchants are actively searching for cloud POS so ISOs and payment partners need a solution to compete. In the UK/EU, non-integrated PDQ (dummy terminals) has been the norm for years. Merchants can comfortably run any POS and separate PDQ.”
Either way, Nobly is serving up customers from the independent merchant to the 500-unit chain. Although Europe may be behind the US POS markets today, I’d bet they both end up in the same spot over the next 5 years: everything is moving to cloud.
Nobly was founded by George Urdea, Royce Fullerton and Sebastiaan Bruinsma. The Nobly system is cloud-based which gives merchants the power to change product features in 100 stores at the press of the button. All key data syncs instantly and updates are carried out with ease. Nobly acts as your store’s Back Office and can help you run nearly every aspect of your enterprise by handling all the time consuming tasks like inventory management and data analytics quickly and reliably, allowing you to concentrate on the day to day running of your business.