This is the second article of our series on open APIs in the POS industry. The first article can be read here.
While some legacy POS companies are working hard to reinforce their walled gardens, those with an eye toward the future – and a desire to stay relevant – are taking a different approach. There is perhaps no starker contrast than the business model around third party integrations.
Aldelo, restaurant POS company founded in 1999, launched its new cloud POS, Aldelo Express, in mid-2018. The launch came after two years of development work. Not six months after the launch of Aldelo Express did Aldelo showcase how committed it really was to getting their new POS model right with the announcement of free third party integrations. Aldelo’s CEO Harry Tu shared more about this decision.
“No company can do everything,” stated Harry, “it’s not logistically possible. We think we can build POS really well so we focus on it. But if you think of the number of solutions that could integrate into their POS they’re unlimited, and we can’t do as good of a job as companies who think about this solutions all day, every day.”
We asked Harry about where he draws the line. That is, what solutions should a POS provider offer? There are undoubtedly features that are required to check the box in a sales process, but good POS companies don’t try to monopolize these solutions. In fact, they don’t think twice about it. “We do have a labor management module as an example, and it’s okay, but there are companies that do this better than us. It’s our job to make sure our customers can get the solution that makes them the most successful, even if that means we’re not the solution provider.”
That’s why Harry decided third parties should be able to integrate into Aldelo Express gratis. No certification fees, no taxes, tolls or tariffs. How they do so follows our guidelines for best approaches.
First, Aldelo has a publically available API. Anyone can see the documentation and start building from there. “It’s easier to let third parties view our API protocols and learn what they need to build to integrate. Instead of putting a person in the way of the workflow we have it wide open to anyone,” says Harry. Aldelo offers a sandbox so developers can test everything out before they’re ready to push to production.
After the developer feels ready to proceed they send a certification request into Aldelo. This isn’t to block approval of qualified parties but rather to ensure the applicant is a real entity. “Our concern is mostly focused around data breaches,” attests Harry. “We’re going to board the third party’s API into our backend system and want to know that it’s a real business. We ask for standard credentials like business documentation as proof it’s not a fly-by-night operation.”
If the integration passes muster then the solution is published in Aldelo’s App Market. From there merchants can click “connect” and the third party solution is turned on. There’s no fee that Aldelo collects in this process.
“Our hope is that third parties will enhance Aldelo; we don’t want to be the reason a customer can’t use the solution they want.” This is a sea change from the position POS companies with legacy assets have taken on the integration front, though many of the newer cloud entrants have open and free APIs.
Since Aldelo is working hard to migrate their merchants to their modern Express POS solution, the open App Market model has been designed exclusively for Aldelo Express. “There’s not any carry over to legacy products because it’s much harder to build and maintain integrations in a local-server environment,” clarified Harry.
Harry, as a developer himself, thinks that third party ISVs are actually doing most of the heavy lifting in these POS integrations; the fees associated with POS integrations make the efforts uneconomic for third parties even. “We already make money from our customers so charging third parties an additional 30% doesn’t seem right. If you think about it your average software business has what, 40-50% margins? Asking for 30% is a huge economic swing and forces third parties to rethink their business model. Is that fair? Instead of pinching pennies we like to think we’re forward looking and view our App Market as investment.”
These app store models deserve extra scrutiny as Apple is being put through the legal ringer themselves. Suffice it to say there’s more than Aldelo questioning app store economics that command 30% revenue share for… well, for very little, really. We’ll have to see what the Supremes rule on the matter.
