About 40% of the retailers and restaurant operators that sign up for merchant services with United Bank Card Inc. are getting free point-of-sale systems as part of the deal.
United Bank Card operates as a super ISO, a large independent sales organization that performs some processing functions. It developed the Harbortouch POS systems in-house and has them manufactured in Asia, Jared Isaacman, company CEO, tells PaymentsSource.
In January, United Bank Card began offering the systems for free to its 3,000 ISOs and agents, who then can make them available to merchants at no cost, Isaacman says. The super ISO installs the systems at the merchants’ places of business, trains the merchants to operate them and services them at no cost, he says.
About 7,000 merchants have accepted the systems thus far this year, Isaacman says. The free systems substitute for other vendors’ equipment that typically might cost $7,000 to $10,000, he contends. Thus, a store using three of the free systems would save up to $30,000, he adds.
The free systems also replace low-cost systems United Bank Card began offering in 2007, Isaacman says. The company provided those earlier systems for $2,500 to ISOs, which typically marked them up to $5,000, according to Isaacman’s figures.
Some ISOs understandably reacted badly to the loss of that margin, but “the numbers do the talking” in favor of the free POS systems, according to Isaacman.
From 2007 to 2011, United Bank Card never deployed more than 40 to 50 “paid” terminals a month, he notes. “The program is now far more affordable for the merchants, which means more sales which translates into more commissions” for agents, Isaacman says.
United Bank Card pays ISOs and agents $350 to $500 upfront for signing a merchant that accepts a free terminal, and it follows up with “aggressive” residual splits that favor the ISO, he maintains.
Tough economic times make the free systems particularly attractive to retailers having trouble securing loans or arranging leases for POS equipment, Isaacman says.
The free systems include touchscreen monitors, central-processing units, cash drawers, receipt printers, barcode readers, customer-display poles, keyboards, mouses and a supply of employee time cards. The company charges for options that include PIN pads, scales and extra time cards.
The software comes in two varieties–one for small retailers and the other for restaurants, Isaacman says. About 80% of the systems the company has placed in the field have been in restaurants, he notes.
The systems may work better for small merchants with one or two checkout areas than for larger merchants that need POS systems that integrate with inventory and information-technology systems that serve an entire enterprise, suggests Mark Dunn, an analyst and president of Field Guide Enterprises, a Hartland, Wis.-based consulting firm.
“There is a lively equipment market in that second group,” Dunn says of the emerging trend of ISOs selling POS systems to retailers.
United POS Solution Inc., which does business as UP Solution, provides hardware and software for POS systems and transaction processing, says Bryan Daughtry, vice president of sales and marketing at the Hackensack, N.J.-based company.
Before investing time in working with a POS company, ISOs should evaluate their options and pick a partner that allows flexibility with regard to supplying one or more of the three elements, Daughtry says.
In a relationship with an ISO, UP Solution does the “heavy lifting” by taking care of the details of the POS-equipment business, he says. That leaves ISOs free to concentrate on selling merchant services, he contends.
Meanwhile, United Bank Card is readying a move into new POS market niches with software offerings slated for introduction in January that would benefit pizza-delivery, salons and multilane retailers, Isaacson says. The company continues to shy away from POS for petroleum retailers because of the need to interface with the gasoline pumps, he says.
About 50% of Hampton, N.J.-based United Bank Card’s employees are dedicated to the POS business, he notes. The company plans to consolidate its offices in Allentown, Pa. next year.
Source:
ISO and Agent
