Can POS Companies Survive without Payments Backing?


Given all the consolidation in POS and payments as of late we decided to ask POS companies without payments backing how they felt the market was trending. Namely, can POS companies survive without payments backing?

We’ve broken the responses into question categories.

Is payments and POS consolidation good or bad for you?

We are seeing some impact from the consolidation of payment and POS at the lower end of the market – small, independent restaurant operators that may not have the upfront cash to pay for a POS and appreciate the benefits of a full metered or as-a-service model – even if they may end up paying more over the long run.

Our mid-sized to larger merchants, however, typically prefer the flexibility of being able to select their own payment provider in order to ensure they are getting the best overall service / price.


I’m almost neutral on the consolidation – however, what makes it more challenging is the fact that of our partners who have been bought (Mercury by Vantiv; OpenEdge by Global) – we had great working relationships with those former companies, and the new companies have all but destroyed the business models and introduced more red tape than I ever thought was needed in this fast paced industry… Service levels at the new companies are poor, at best. Regarding the announcement of TSYS buying Cayan – our perspective is that Cayan has been a dumpster fire for a long time (yes, we are partnered with them on some level) – and this purchase can’t make service levels any worse.

There are pros and cons – if I had to pick a side I’d say it’s net negative but it’s not so clear cut. The main pro is that the consolidation can cause some merchants to look to switch POS systems and processors because they don’t like the direction the company is going.  We have seen this with Clover and also with some of the systems that Heartland has purchased.
The con is that the processor becomes more powerful in terms of their ability to lock merchants into the product/service.  We also see this with Clover.
Even with the consolidation there are always enterprising ISOs or reps who work for or with big processing companies who will go out on their own and find solutions for their merchants.  This won’t change and might even increase with more consolidation because consolidation of these companies usually leads to stagnation of the POS and thus demand increases for POS options that are not stagnant.
 Does it make it easier or harder to win a deal?

We have been trying to couple POS with MS (payments) for years – but have always maintained a “neutral” gateway so we would not lose a deal. However, since we are not an ISO (probably the last person on the planet to say that) – we only get a sliver of the payments pie, and not being an ISO has probably made it harder to close deals…


Really just depends.  Every deal is unique.  I might re-phrase the question as “does it make it easier or harder to generate leads?” and in that case I think it’s slightly harder.

Are margins going down as hardware/software is given away for payments contracts?

Margins are definitely compressed. We’ve never made much on hardware, but now it’s downright dismal. Truth be told, I’d love to be out of the hardware business – but our largest customers demand it still.


There is always pressure on margins with competition growing, especially from a company like Square.  We try to be more “premium” upmarket but we’re not going to turn away lower value customers.  There is more pressure on margin when dealing with those price-conscious customers.

Are larger merchants refusing to use POS with payment contracts and will that change?

They are conscientious objectors for sure – but more and more they are accepting it as a reality.

The smaller, less complex merchant: processor-provided POS is the future. The mid/upper market merchant demands the personal touch and customization that comes from the VAR community.


Larger merchants usually prefer to limit the number of variables that are changing for them at any given time.  If they’re changing POS they usually don’t want to also change processors, it’s enough for them to worry about the POS stuff as it is.

We thought this last assessment was a great way to wrap up the POS market generally.

Future VARs cannot survive without either 1) providing a premium level of software and services at a premium price point or 2) subsidizing that premium level software and services with a merchant services offering.

As a result of the recent acquisitions and POS market entrances over the past few years, we have had a huge influx in ISOs and VARs demanding a mature ISV that can service the hospitality market without restrictions or heavy penalties for independent processing.

Merchants are not a fan of 1-800 Call Center Support. They are willing to pay a premium for VAR level support services, especially after experiencing email-only or call center-type support services currently being offered by the payment community. Merchants want someone familiar with their operations and can offer not only support but potential advice on best practices and operations.

Conscientious merchants see the independence of POS Software and Merchant Processing as a benefit and are willing to pay a premium to select their own provider.

Overall the market has been and is continuing to shift and make higher demands on the providers – Whether you are an ISVs, ISOs, Wholesale ISO, ISO Agent, VAR or Acquirer – the merchant industry has put everyone on notice – If you want to be prosperous, you need to find your space, make some partnerships, and excel at it.