On July 13, 2009, United Bank Card Inc. rolled out what the company said is the "first truly integrated" electronic cash register (ECR) solution. And the company is giving the ECRs away.
Jared Isaacman, Chief Executive Officer for UBC, said the program is unique because of the "built-in capability that this system possesses." It is more than just a standard, all-in-one unit with a credit card terminal plugged into a cash register, he added.
The ECR comes in two Casio Computer Co. Ltd. models (one designed for retail and one for restaurant environments), with UBC's integrated technology. Both have a cash drawer and customer display and process credit, debit and gift cards, all handled from a liquid crystal display (LCD) menu.
The program includes a turnkey fulfillment center and a lifetime guarantee on the pre-programmed ECR. Merchants can use the online wizard to customize the look and feel of their ECR's LCD display. Isaacman said that, in addition, UBC integrates the merchants' preferences into the UBC system and archives them, so if the ECR goes down, the merchants' parameters can be reloaded onto the replacement machine.
Paul Martaus, President of consulting firm Martaus & Associates, said, "I suspect that [Isaacman's] competitors are going to say, 'Here we go again,' because the rest of the industry absolutely hated the free terminal stuff." Their disdain came from so many retailers having been fooled by ISOs into paying exorbitant discount fees in order to gain access to the free terminals, he said.
According to Isaacman, the annual fee that UBC's merchants paid in 2000 is the same fee its merchants paid in 2004 when they got free terminals. Now the same $79 annual fee gets the merchants free cash registers. "We are in the service, recurring revenue business," Isaacman said. "At some point or another, the box itself, whether it's a cash register, or a cell phone or a cable box or something like that, takes a distant second to a recurring revenue."
Marc Abbey, Managing Partner, First Annapolis Cons-ulting, called UBC's timing clever. Given the depressed economy, most of UBC's competitors won't have the kind of capital required to give the equipment away upfront, he said. He added that this free ECR program was not likely to have the same broad ramifications that the free terminal program had because the target market this time is a niche market: merchants that can afford the total cost of integration.
Independent consultant Mark Dunn believes UBC isn't the first to offer an integrated cash register. "I think what's neat, of course, is that they're taking the free equipment approach," he said. But he concluded that the success or failure of the program will rest on whether UBC can offer additional value to the program and whether UBC's sales force can convince merchants the device will deliver benefits.
Martaus figured integrated solutions would have replaced free-standing terminals 20 years ago "because I see such a tremendous amount of promise in having all of the transaction processing stuff integrated into your payment system, your inventory control system and all of that."
Martaus said retailers reject the integrated devices because when they break, merchants can't conduct business until a replacement system arrives. Another reason for merchants' reluctance may be that integrated solutions in the past have utilized Microsoft Corp. POS operating systems. "We all know anything that's Windows-based goes up and down like a yo-yo," he said. "So, there may be a stigma attached."
In another move, UBC launched a year-long contest with a $1 million prize for its sales partners. Each deal submitted constitutes an entry. Up to 27,000 entries will be accepted. Isaacman said giving ISOs a $50 bonus for signing up merchants on the program wasn't a big enough incentive; with the free program and the $1 million contest, UBC changes the industry and one merchant level salesperson's life at the same time.
According to UBC, the company will not implement any new fees or increase rates to fund the million dollar prize.
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