How Google Is Drastically Changing POS & Payments


The European Union has been attacking Alphabet (Google) for its dominant position in Europe. With 80% of the world phone market via Android, and 90% of the European search market via Google, it’s clear to see how Google might be large enough to make regulators fearful.

But the caveat with online businesses is that their positions can change fast. Look at the growth of Facebook or Snapchat to see how a new entrant could disrupt Google’s stronghold in short order.

What doesn’t move quickly, however, is brick and mortar. Companies in the physical world take a long time to bear fruit and scratch together market share. Walmart, founded in 1962, is the world’s largest retailer yet still only has 25% of US market share. Compare that with Amazon, an eretailer that’s been around since 1994, owns 50% of all ecommerce, and is now worth twice as much as Walmart by market capitalization.

So when news leaks that Google is now tracking consumer purchases for 70% of US credit and debit cards in the offline world, one has to wonder if the DOJ will get involved. To pull from The Economist’s recent expose on data,

The dearth of data markets will also make it more difficult to solve knotty policy problems. Three stand out: antitrust, privacy and social equality. The most pressing one, arguably, is antitrust—as was the case with oil. In 1911 America’s Supreme Court upheld a lower-court ruling to break up Standard Oil, which then controlled around 90% of oil refining in the country.

First, why does Google want offline purchase data?

The holy grail of marketing is measuring lift on advertising. Since the great majority of purchases still happen offline, advertisers would love to connect online advertising with offline conversions. The two digital ways to track people’s offline purchases have been through mobile location apps, where companies like Facebook will monitor your location after seeing an advertisement, and more recently mobile payment apps.

As the former is very tenuous, and the latter represents less than 1% of payments in the US, credit and debit card activity is the best way to measure offline conversions.

To close the loop Google partnered with credit and debit card networks – either the processors or the card-issuing networks. Google is then “blindly” tying credit card purchases to those seeing online advertisements. The result is a good handle on who is actually spending money, where, after seeing advertisements.

Of course the biggest problem is still visibility to item-level sales: did the person buy Nike shoes? The item-level data, also called SKU for stock keeping unit, is data that only exists on the Point of Sale (POS) today. This matters because manufacturers – not retailers – account for nearly 80% of advertising spend. Think about it: Walmart’s margins are 3% while Budweiser’s margins are 60%. Follow the money.

How will Google acquire offline SKU purchase data to tap larger advertising budgets?

Well one of their bets was surely Toast, a POS for the hospitality industry. If Toast did well in restaurants, they could justify expanding into retail. Toast, however, does not seem to be growing nearly fast enough to justify their valuation, nor Google’s attention. Google will surely realize, like Bob Carr at Heartland, that it will be cheaper to buy legacy POS companies to acquire SKU data than it would to keep pouring money into Toast. For the $40MM or so Toast has raised, Heartland bought over 100k locations worth of SKU data – a number that’s 30x larger than Toast’s estimated merchant count.

The other way Google acquires SKU data is from the payment processors it partners with.

First Data’s Clover POS has grown to over 100K merchants, and the POS system is collecting SKU data. Granted it’s from a motley group of merchants, and First Data is recognizing Clover’s limitations to move upstream, but as we’ve long argued: POS and payments are natural fits for each other. Once the payment processors discover the value in the SKU data that alone should drive consolidation, even if they haven’t rationalized the value of POS to prevent customer churn and lower acquisition cost to lifetime customer value ratios.

The payments companies own distribution in the offline world, and Google knows they need them. Not until mobile payments proliferate, or POS bought directly online en masse, will they be replaced. Until then, we’ll watch what the DOJ does.



  1. All this data being acquired…and still I have yet to see an ad for something I am looking to buy. Let me buy a new car, and I will see car dealer ads for months after the fact. Go figure. I’ve been to Best Buy and have done web searches a few times to look at 4K TVs and vacuum robots- but no one is showing me an ad for either of those.

    1. This is the classic battle between privacy and accuracy. No doubt the data exists to deliver this experience for you, but the government gets in the way of the free market. Europe has it much worse.

  2. AirBNB does not ask you to build a house, Uber does not ask you to buy a car.. So why ask the retailer to invest in new technology. Simply use the device a retailer already has.. yes.. There is a very easy way to get SKU level transaction data. 100% pos agnostic, and low cost.. PROVIDED of course that the retailer is willing to share, its also available in real time which is an added bonus. Whats the device? Go to and see how we are enabling real time SKU level geo located transaction data to be shared in real time with Data Players.

    1. I agree that legacy POS companies have been so slow to understand the possibilities (because they’re nearly all started by former merchants who are likewise clueless about data) but I’m not a believer that the printers will be the solution. Every merchant needs a POS, but not every merchant wants to pay for a cloud printer. POS is undoubtedly going to cloud and the people getting into the POS business are much smarter than their legacy forebears.

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