We tried our hand at a universal API a few years ago. While we had great initial interest, there were few POS companies willing to commit the resources to build something of the sort. As with most things in life timing is everything.
Even though we failed in our efforts we presented the case for how POS companies should cooperate to build universal systems for the future. Our argument was that POS was hard enough to build, sell, and support, and POS companies should pool resources to focus on building things that are in their best interests looking 3, 4, or 5 years down the road.
A great and obvious example is an OpenTable analogue. OpenTable, which charges $600/mo, is ripe for disruption. POS companies already have all the integrations, data, and distribution they could ever dream up to build an OpenTable killer, they just don’t have the wherewithal to productize anything meaningful. By seeding and spinning out a separate company with a properly incentivized entrepreneur at the helm, we believe the POS industry could avoid ceding control of its future to third party ordering and delivery companies, which are very much a growing threat. Copy-paste this across a number of business product lines and POS companies will see the incremental revenues they desperately crave.
The irony in all this is halfway around the world (literally) an Australian payments processor has already dreamed up and executed this plan of POS partnerships and universal APIs.
“The processing landscape in Australia is different,” explains Mark Beeley of idealpos, an Australian restaurant POS company. “In Australia the banks reach out directly to merchants without the involvement of a third party merchant acquirer as the banks are acquirers in their own right.” There are four major banks in Australia which means there are few options for merchants.
Over time the banks started building more direct software integrations to merchants but there was still room to improve. Tyro, a B2B payment processor, merchant acquirer, and Australian bank focused on SMBs, saw the writing on the wall and set out to disrupt the banks at their own game. (Unfortunately Tyro declined formal comment but several insiders were fans of ReformingRetail and helped us piece this together.)
Tyro wanted to give merchants another option. Through building interfaces with POS companies, Tyro could initially port the top-line information from a dumb terminal to the POS. “This prevented the need to manually enter data into the POS,” explained a source. If you’re shocked the banks didn’t innovate, don’t be: this is what happens you have legislated monopolies.
Eventually Tyro had collected 200 or so POS integrations. It was then that one of Tyro’s investors, Atlassian co-founder Mike Cannon-Brooks, thought Tyro could do a lot more with the data if they were able to get SKU, or item-level information. This is what gave Tyro the idea for this universal API.
Anonymous source
If Tyro got enough SKU data they could provide merchants with unique insights. Additionally, Tyro could make it easier for merchants to discover and onboard new products by maintaining universal POS integrations for third party developers. Tyro reasoned that the banks weren’t willing to undertake such an effort, even assuming banks knew what to do with data and software in the first place.
Australian POS companies tell the story with a more serendipitous flair.
A group of us [Australian POS companies] came to Tyro after another POS company approached us with a universal API model of their own. IMPOS, a POS competitor, created Doshii as their API platform. They asked if we would want to use it as our traffic cop. We didn’t want to be empowering a competitor so we went to Tyro.
Mark Beeley, idealpos
From there Tyro flexed its creative muscle. Like US payments counterparts, Tyro had already built revenue share relationships with POS companies. (Tyro actually started down this road in 2009, far ahead of the rest of the Australian market.) But given these new insights Tyro quickly contacted the six largest restaurant POS companies in Australia (Bepoz, Fedelta, Idealpos, OrderMate, Redcat and SwiftPOS) and signed an exclusive deal to work on a joint universal API. For the record, exclusivity is necessary to give participants confidence that there will be no other distractions – it’s a tactic made popular in The Sumo Advantage.
Tyro executed this at relative light speed. We had an agreement in place within 12 months, the six POS partners signed up and off we went.
Mark Beeley, idealpos
According to an inside source, Tyro was able to achieve such quick buy-in from POS providers because they offered a financial incentive for being a first mover on its API platform. As certain milestones were reached, the incentive vests. Additionally the POS companies are not exclusive to Tyro’s payments processing as they already have existing payment integrations in the market.
Tyro’s API is thus usable for payments as well as a number of third party products, like loyalty, marketing, and more. POS companies aren’t charging any integration fees to third parties, although Tyro might charge something. We asked several third parties if they were being charged a fee and they told us they couldn’t comment due to effective gag orders enforced by Tyro (not cool).
The POS companies that have partnered with Tyro are relying on Tyro to bring a whole data model to life. Tyro has plans to cleanse and productize aggregate data already, and POS companies must think the financial incentive they’ve received sufficiently compensates them for the data upside they might otherwise see. We hope it was a healthy chunk because we strongly believe the data model will be worth far more than POS SaaS revenues and payments residuals ever were.
As for idealpos, they’re coming to America. The success they’ve seen with the universal API efforts in Australia has them confident that there are other markets that have yet to be opened up. “We’ve started our foray in the US and are talking with resellers,” shared Mark. IdealPOS has already installed many single and multi-site solutions (100+ POS licenses) and feels their product will do well here. We’ve added them to our POS list to give you more information.
Idealpos’ target market is aimed at SMB’s in hospitality and retail and utilizes online licensing, synchronized data to the cloud, eCommerce APIs and has a reseller portal to manage customer licenses. Offered as a SaaS and perpetual license options, they feel their pricing will be competitive in the US market while offering resellers a wide range of solutions to offer their customers. You can contact their CEO and founder at Mark.beeley [at] idealpos.co.
What surprised Mark – and still surprises us, sadly – is the lack of cooperation in the US POS market. “I was amazed to learn, after reading ReformingRetail, that Australia was ahead of the US in regards to APIs and integrations. I never expected we’d get a data model to work faster than America.”
The POS industry still needs to surface data from 25% of a vertical’s locations (so for US restaurants that would be about 162,500 of the 650,000 locations) to reach statistical confidence that breaks us into co-op dollar territory. Here’s what we’ve already said the matter previously:
In order for suppliers to be interested in putting their coop dollars to work, a nontrivial market share must be presented (generally pegged at 25%, or data from 162,500 restaurant rooftops). To achieve the most commercially favorable rates as a DSP, a certain scale must be achieved. And to suggest the highest ROI marketing campaigns, a large amount of data must be available for machines to learn on.
Ourselves, because all we do is data work
Why hasn’t this happened here yet? Because every slap dick with a POS and a calculator thinks they’ll pull it off themselves. Meanwhile their POS is losing market share and they can’t even build an EMV solution that works.
Riiight.
Next up, Angola beats US to universal POS API…
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