talech has long been a quiet POS player, striking agreements with banks and their acquiring arms to move their restaurant and retail POS offering. While POS companies like Toast have raised hundreds of millions of dollars to sell direct (with trivial contribution from a nominal reseller channel), talech has done the polar opposite, using existing payments channels to scale. As of this writing talech has a similar footprint of merchants than does Toast despite raising less than 10% of the funds over the same period of time.
Because of their market approach, talech has had to develop things pretty broadly, supporting both iOS and Android operating systems and integrating with many payment hardware devices from Poynt to Verifone’s Carbon. Even their core POS offering spans food service to a multitude of retail categories.
What caught our attention was talech’s latest bank partnership with Bank of America Merchant Services (BAMS) and why that partnership came to be. Al Echamendi, talech’s Head of Business Development, sat down with us to give us some more color.
Historically talech has partnered with national and international banks and their ISO channels. We had some great early successes with Elavon and US Bank that has allowed us to get to where we are today. That includes a two-year relationship with Chase Paymentech where they have been referring customers to us; now Chase is beginning to actively re-sell talech and we couldn’t be more thrilled. We have two other large acquirers launching in Q1 in both reseller and referral models.
Considering payments companies have historically had difficulty selling and supporting anything not named payments, we wondered how talech executes its POS sales and support through these payment channels.
We have core competence in enabling our partners’ sales forces that are new to selling value added services to their customers. In the reseller model, we invest time with sales teams to ensure that they’re qualified to place talech with prospective customers. If our reseller model is unworkable for our channel partners, they can refer leads. talech then closes the deals and onboards the customers.
We also offer Tier 1 support for all customers. We do remote installation and training for smaller customers or bring in a partner like Boomtown for larger onsite installations. If a customer wants onsite support Boomtown can facilitate that as well.
Our observation again remains that payments companies need to learn how to sell and support POS. Punting this down the road is not going to serve their longer term interests. Interchange and payments tariffs are only coming down and POS provides massive optionality as existing revenues erode. Along these lines we asked Al if he sees the payments companies really changing or if they’re selling POS because they have to.
It depends on the bank. For instance, Elavon has become our most proficient partner at selling POS. They’ve done so with top-down alignment where executive leadership structured the right sales incentives and made the initiative an organizational focus. So some organizations are transitioning better than others, I’d say.
On the recent talech/BAMS announcement, the partnership with BAMS was specific to the restaurant vertical.
“BAMS was looking for a restaurant-grade solution with wraparound service and support, so they engaged with us and started a multi-month pilot. BAMS is now rolling out nationwide with talech.” By the way, if we’re reading between the lines here we don’t think this is a good look for First Data’s Clover POS by any stretch of the imagination: BAMS and First Data have a strategic processing relationship and that BAMS chose talech over Clover says a lot about the limitations of Clover.
Of course at some point we knew the payments players would need to move upmarket. High levels of churn and cheap customers are a real problem downmarket. First Data inexplicably (actually they did so because they don’t have a software culture) abandoned feature maturity on Clover which has left a gaping hole that players like talech and Square are trying to fill. The difficulty in moving upmarket is that these merchants want more support and service, and it’s hard to know if the payments industry is yet ready to fill that void.
We’re optimistic we can work with our partners to move talech further upmarket. There are many sales reps within banks that are willing and able to sell value-added products including a POS, especially when they get great wrap-around support. Some banks have developed “Tiger Teams” of sales reps who are dedicated to higher end customers.
In the meantime talech will continue to improve its offering. They’re intending to launch a services version of their POS in 2019 with appointment capabilities. “This will make talech applicable to 70% of street accounts,” explains Al. “And having the functionality for multiple verticals within one POS makes it easier for bank reps to learn than to learn 3 or 4 different systems.” We agree, though it will be hard to have full feature parity with a POS that solely focuses on one vertical.
talech has an open API so you can expect more functionality from them in the future. They have some existing partnerships with labor and ecommerce providers and a number of accounting integrations like Sage and Quickbooks. “We are always making strategic calls on when to build and when to partner and we’ll be evaluating more of this in 2019,” says Al.
It’s time the payments industry grows up. Maybe talech can be their teacher.
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