Lightspeed POS, which went public earlier this year, has been doing very well with its payments processing solution. While analysts thought the attach rates for Lightspeed Payments would hover around 15%, it’s actually been north of 40%.
The reasons, as readers here know, is pretty straightforward: payments offers no value and is the poster child of a commoditized product, so it may as well come from your software provider. There are also some very practical reasons why joining the two can be beneficial:
- Data insights
- Capital access
- Supplier consolidation
- Better support
- Tighter integrations
These truths are further reflected in Cowen’s research on verticalized payments. Here’s a soundbite:
While still prevalent, traditional customer acquisition channels (such as the bank channel) are under increasing pressure from a savvy customer base growing more comfortable with self-sourcing solutions or using specialized Dealer/distributor networks – in turn opening the door for new POS entrants to make headway vs. incumbents. The importance of traditional sales channels – namely the bank channel and direct feet on the street – appears to be waning with over 65% of respondents having either self-sourced their payments processing or received a referral from a partner (40% of restaurants surveyed self-sourced while 25% were referred by a POS partner).
Cowen Restaurant Report
TouchBistro has blown away these numbers.
Even though TouchBistro offers open payments, meaning a merchant can choose whatever processing option they want, TouchBistro is finding that more than 70% of their new merchants opt for their payments processing solutions.
“We have an overall payments attach rate around 60%,” said John Florinis, TouchBistro’s VP of Payments. “This comes as we cross-sell payments into existing customers and onboard new merchants on our payments. Currently new merchants are attaching to our payments in the low 70 percent.”
And if that’s not enough, TouchBistro is ending July with an 81% payments attach rate.
If you’re curious, TouchBistro operates their processing in a payfac-light model. TouchBistro sets the pricing and sells the merchants on a Chase Paymentech paper, then works with Chase to facilitate boarding. “Merchants get one box from TouchBistro, which makes the process very seamless,” Florinis tells us.
TouchBistro has recently announced their payments partnership with EVO Payments in Mexico, and they’ll be announcing a UK partnership in the coming weeks.
One thing should be clear: merchants are choosing to snag payments from their software providers when it’s an option. If every software company reaches Touchbistro’s 70% attach rates, the stand-alone payments market just got that much smaller.
Even though payments processors have historically made all the money, we suspect POS and software companies will have the last laugh.
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