When Cloud POS Isn’t “Cloud” And Merchants Get Swindled

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We’ve talked about the definition of cloud POS, and how that’s been muddled by hundreds of millions in marketing spend targeting merchants. What we haven’t talked about are the point of sale (POS) provides who are doing the bare minimum to sell their product as “cloud” but are not delivering on the value cloud brings merchants. This is disingenuous if I use a kind adjective.

A sleazy car salesman, Con man, retro suit wearing man with happy face and doing the two thumbs up sign.

Let’s turn to an analogue.

Back in 2007, Minnesota followed a national trend by passing an anti-smoking law that banned smoking in pretty much every public building, including bars. Unfortunately, that was bad news for the bars, because if you’re going to get good and drunk to fight off the depression manual labor and seasonal affective disorder brings, you want to get your smoke on, too. Nobody wants to go stand outside to smoke, since Minnesota gets cold. So, that winter, the customers stayed home.

The owners of the Barnacles Bar were determined to find a loophole that would let their nicotine-addicted clientele feed their deadly vice in peace. They found it:

There was a line in the law that said if you were an actor in a play, and your character smoked, then you’d get a pass. You know, like if you were doing a live stage show of the X-Files and you were playing the main bad guy. Thus, the owners of the bar declared that they were staging a continuous live performance and that everyone in the bar was an actor.

The thing was, the law didn’t bother to specify what was meant by “stage performances,” and really, how do you argue? Who cares if they didn’t have a script and didn’t get paid! So, you enter Barnacles on a Saturday night, and then see that the staff are in costume and that you have become a performer in their “Theater Night.” Sure, you don’t have any lines and you’re probably just playing “Guy Drinking To Forget His Job #5,” but, hey, you need to smoke to get into character.

And by defining themselves as “actors”, Barnacles was able to make more sales than its competitors.


The first of the non-cloud “cloud” POS comes from a payment processor, Electronic Payments. Their lightweight cloud POS product, Exatouch, has no outside connectivity that empowers their merchants to get more out of their system. There’s no app store, no interface to best-of-breed partners, and no way to grow your business with their system. The product feels every bit as walled-off as legacy systems Micros and Aloha. I’ve reached out to their CEO and head of product but never heard back. This leads me to say this to merchants: be careful when choosing a “cloud” POS that comes from a payments provider. Look for signs that the provider is working with third parties or opening up their system to do what’s in YOUR best interest, no theirs. As much as we don’t think Clover’s app store model works, at least they’ll work with outside parties to enhance their product offerings.

Next on the list is Lavu. Lavu always feels like it’s a month away from imploding. When their investors brought in a credible CEO after 18 months of little growth, he departed after 3 months on the job. I remember this sort of behavior at Clinkle before it ended poorly. But that’s not what this article is about. Third parties that have integrated with Lavu woefully lament that it took over a year of effort. They had little support from Lavu, even though customers wanted the product. Lavu will talk about their API, but it’s not what they’ve made it out to be. I’ve emailed their new CEO about such concerns but alas, no response.

Ordyx might arguably have been the first cloud POS company on the block. Their cloud system dates back over a decade, though they’re not as widely known as some of the newer cloud systems and don’t have the footprint of legacy providers. What Ordyx won in early vision has been lost along the path. There’s no published API, and integrations can take literal years to move. Google reached a billion dollars in revenue in less than four years: it shouldn’t take as long for merchants to expect an integration.

Shopkeep could be the largest offender. As a company that’s raised more than $70MM over five years and boasts north of 20,000 merchants, they still have no API. They’ve picked a few third party solutions to integrate with, but that’s where the extensibility ends. How they raised so much money without keeping merchants in mind is beyond me… there are self-funded cloud companies that have much more functionality through partnerships and sensical development efforts that prioritize customers. It could very well be a personnel issue: Shopkeep has churned through many key leaders over the past two years, including its CEO, CTO, SVP of Channel, SVP of Data, SVP of Business Development, and surely others that I’m missing.

A cloud POS company that’s doing well by working through the payments channel is talech. Despite solid acceptance by small merchants, they’ve likewise not bothered to build an accessible API, nor done much in the way of extending value through the cloud. Their list of partners is nearly exclusively payment distribution partners, not products or services that help the merchant. I’ve reached out to their CEO and heads of business development without response.

Last but certainly not least is NCR’s tablet product, NCR Silver. Silver does not have an open API, nor does it allow third party integration. Credit card processors can load gift cards, and NCR did partner with a few loyalty and accounting providers, but that’s the extent of Silver’s flexibility. It seems third parties would need to go through Cloud Connect for Aloha, and as much as that program makes no economic sense for third party developers, it’s only relegated to Aloha POS. I asked for clarification from the head of the NCR’s Cloud Connect and didn’t hear back.

Merchants – get educated. The value of cloud is much more than a pretty tablet and fancy marketing. It’s the ability to connect with any third party solutions, as well as strategic partnerships on behalf of your POS provider that make your business more successful. Your POS provider should be looking out for you – you have enough work to do with running your business.

Dealers and channel – wisen up. You think your merchants aren’t going to learn their POS is far inferior than other alternatives? Information is being democratized. Make sure you partner with solution providers that put the merchant first. The industry already has a negative reputation so don’t be an enabler. If the merchant succeeds, you succeed.

Are we missing any “cloud” systems on the list? Let us know in the comments.

 

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  • Sunny Dronawat

    http://www.posoncloud.com is the first 100% cloud based product to penetrate the full serve restaurant and healthcare market. It has full functionality that only legacy systems have.

    • JT

      As far as I’m aware POSonCloud hasn’t built any external APIs

  • Stacy Duty

    Another insightful article, very much appreciated

  • Vaughan Rowsell

    Take a look at http://www.vendhq.com. 100% cloud from day one with over 15,000 stores. I founded Vend in 2010.

    • JT

      Yes, we know vend well 😉

  • Wladimiro Bedin

    I agree with Jordan and it is not the first time! Cloud POS is a paradigm change.
    In my 2013 “Cloud POS Manifesto” you will find: a Cloud POS is part of an ecosystem
    http://akite.net/en/news/the-cloud-pos-manifesto