Deriving New Revenues From Payments And POS

By Brian Albright, Field Technologies

To succeed in the changing payment market, VARs should develop new services and establish vertical market expertise.

The payment and point of sale (POS) solution landscape is changing. Retailers can select from a multitude of POS and payment options, and there are more user-friendly, simplified, and less costly solutions available. Given these market dynamics, how can VARs and ISVs demonstrate value through their payment offerings?

First, there are a number of value-added services and payment products that VARs can offer to their clients, including support for NFC (near-field communication) and EMV (Europay, MasterCard, and Visa) technologies, mobile solutions, and other alternative payment options, along with loyalty programs and other add-ons.

“By offering these solutions to your customers, you can add value to your offering and differentiate yourself in the market,” says Jon Brandon, VP of channel sales at Harbortouch. “These include online ordering, online reservations, tableside ordering, loyalty programs, and mobile payment integration, along with next-generation payment methods. Value-added services not only strengthen the relationships with your customers and provide differentiation in the market, but they also provide incremental revenue that can help you establish more profitable relationships.”

VARs can also establish themselves as trusted advisers to their customers by developing vertical market expertise. “With all of these new POS applications out there, merchants are left wondering, which is the right one for me?” says Dan Dufault, VP of sales and marketing at UP Solution. “VARs can provide a significant level of value by offering POS solutions or applications that are tailored and designed from the ground up for that merchant’s specific market.”

Solution flexibility is also important as new payment types emerge. “Things like mobile payments are finally coming to fruition, but that doesn’t strip out the complexity of the POS,” Dufault says. “Having POS solutions that are able to address new payment types is important to a merchant, because the merchants don’t want to be left behind. By offering the ability to adjust to that merchant’s market needs, and providing support in ways that your customers may not even know they need, you can turn the POS into a profit center for them versus a cost center.”

New Professional Services And Consulting Opportunities
How can VARs build on these capabilities to boost revenues? One way is to further explore additional solutions and partnership models that can help them differentiate. “Payments is a very convoluted industry, but it’s getting easier to understand,” says Russell Harty, senior VP of key accounts and partner channel sales at Merchant Warehouse. “Payment companies can offer new solutions or the ability for VARs to do their own merchant acquiring to increase offerings, business, and profits. There are other value-added solutions that can easily be bundled in with POS and traditional payments that can help VARs and ISVs obtain new customers and keep existing ones.”

In order to do so, VARs and ISVs need payment provider partners who provide the type of flexibility and up-to-date technology support merchants are looking for. “As these next-generation payments begin to gain mainstream adoption, it is more important than ever to have a partner in the payments space who will support these technologies,” Brandon says.

Because the number of payment options available has increased, VARs can use their own industry expertise to create new service offerings. “Traditionally, VARs sold POS and other technologies that helped retailers run their businesses,” Harty says. “But there are more and more professional services and consulting opportunities for VARs these days. Payments is a great example. If the VAR wants to write their own paperwork and not just refer his leads, he can increase his residual revenue significantly.”

Selecting A Payments Partner
As POS and payments continue to converge, the relationship between VARs/ISVs and payment processors has shifted towards a more collaborative partnership. POS and payments need to work seamlessly together in order to deliver a positive experience for customers, so it is important to select a payments provider who is willing to work closely with their channel partners. “Many VARs/ISVs are also now taking advantage of additional revenue sources from their payment providers,” says Brandon. “These include various value- added services now being offered by payment providers. Many VARs/ISVs have gone even further and embraced entirely new revenue models such as POSas- a-Service. This approach provides a more stable and lucrative revenue stream for VARs/ISVs.”

According to Dufault, VARs should look for payment partners that have a broad vision of what the future holds for payments, as well as a clear near-term road map for their products. “A lot of payment companies talk in very broad terms about their business,” Dufault says. “You want to do business with a company that can outline specific capabilities around using customer data in gift and loyalty programs, for example, and that have solutions that are fully supported and managed via the cloud. You want that type of specificity.”

The payment company should also be forward-thinking, and have clear product development goals around developments like Apple Pay, NFC, and mobile payments. “EMV and NFC are very real payment methods that are going to impact the POS and the merchant countertop, so partnering with a payments company that can help with that shift is extremely valuable,” Harty says. “While VARs are looking at it from the standpoint of customer preparedness and opportunity, ISVs need to incorporate these new payment types into their software in an easy and affordable way that is going to help them scale their product and their sales efforts.”

The provider should take a true partnership approach to the channel, offering training and dedicated support, along with rate reviews and assistance with the selling process. They should also provide ongoing PCI (Payment Card Industry) guidance, support, and training, which will help both VARs/ISVs and their merchant customers.

“PCI is complex and confusing, and can be expensive, so if you can simplify that for a merchant, and offer that guidance, that helps them on an ongoing basis,” Dufault says. “That’s the type of partner you want to do business with.”

Dufault adds that shifting market dynamics have created an environment for fostering strategic partnerships in the payment space. “Now that point of sale is becoming a far more important aspect of growing the business and making it profitable, there are services and products around that the VAR can now play the role of trusted adviser to help them implement that new profit center,” Dufault says. “There are certainly opportunities around managing data and loyalty programs, as well as service-related opportunities that allow the merchant to offload an activity they don’t want to manage to the VAR for a monthly fee.”

New revenue models are emerging, and resellers have to be prepared to adjust. The line between what the average ISV, VAR, and processor are doing is blurring as VARs develop their own POS solutions, ISVs expand into payments and loyalty, and processors invest in POS systems.

“With this model, processors can go straight to VARs with their own POS solution,” Harty says. “A lot of ISVs have decided it’s more cost effective to cut out VARs and they can do this with the App Store and other direct sales models. The traditional dichotomy of the POS/ VAR/ISO/processor relationship is changing a bit, but that is creating more opportunities for everyone.”