By Allen Kopelman
Nationwide Payment Systems Inc.
Once upon a time, POS companies sold hardware and software and left payment processing to ISOs and merchant level salespeople (MLSs). Then Mercury Payments began sharing residuals with POS partners in the early 2000s, and a decade later, a company now known as Shift4 introduced free POS systems with embedded payments.
Before too long, the payments industry was rife with partnerships, mergers and acquisitions between POS technology companies and merchant acquirers.
My stomach hurts when I see MLSs on Facebook groups looking for agnostic POS systems. I'm reminded of the hundreds of merchants we've lost over the years, along with millions in residuals.
One by one, formerly payments-agnostic POS companies began poaching our customers, including some that had been with us for over a decade. Merchants who had invested in POS systems or had been lured into free systems were given an ultimatum: switch to a new processing platform or your equipment will be useless.
In retrospect, we lost business over time but not all at once, like other ISOs and MLSs. I know an ISO that lost over 50 prime restaurant accounts when their POS dealer was acquired and a bulk of their income disappeared overnight.
Another ISO had been sharing about $80,000 a month with a dealer until the dealer was sold, and all the accounts were switched over. I'm sure there are hundreds of other stories like this.
If you think this can't happen to you, think again. POS partners are poaching hard-earned accounts in record numbers. Some are former partners and friends, who came to us on a wing and a prayer, hoping to sell some cool new tech.
After we helped them grow revenue and market share, we got screwed without a kiss. My partner Dave and I got sick and tired of losing merchants to predatory POS companies and decided to do something about it.
Let's face it: being a POS dealer is a pain in the butt. Too many calls, too much driving, too much time tied up building menus, training staff, setting up equipment and learning software from understaffed companies with subpar developers and unstable systems. It didn't take long for me to throw in the towel. I told Dave, if you want to sell POS, leave me out of it, unless we find a good partner.
Eventually, we struck gold with a POS partner that handles menu-building, training, installation and help desk support. And then we found another company that specializes in retail verticals and does all the heavy lifting.
These partners free us to do what we do best: sell! Like most MLSs, we don't have IT backgrounds and we don't write code. Having POS partners manage these things enables us to grow and scale our business.
Thanks to our new POS partnerships, Dave and I don't have to rush out at 1 a.m. to fix some nightclub's POS equipment. Of course, we knew there would be tradeoffs, but we are happy to share some residual revenue with partners that answer late-night service calls, order hardware, ship product and follow up on equipment warranties. Today, with two great partners, we're selling and making money. We're not the least expensive and we don't expect to win every deal, but we found a way to stay in the POS game and offer great, affordable products to merchants.
We vetted these companies carefully, making sure that they owned their technology stacks and were laser-focused on organic growth through long-term partner relationships.
I was very happy to clean out two storage areas in our office and recycle a ton of POS equipment. I was happy to trade some hardware and software income for fewer phone calls and more time to sell and enjoy life. Some agents like doing installations, and that's fine. We have been there, done that, and wish you all the best.
Like a lot of payment professionals, Dave and I learned the hard way that not all POS companies are alike. Some may offer lucrative sign-on bonuses; others may be processor-agnostic today and your most antagonistic competitor tomorrow, when a dealer comes in and takes 80 of your best accounts in a single swipe.
When private equity firms invest in POS companies, they look for ways to increase income and payments always come first.
Can you afford to lose $40,000 or more in monthly residual income? I know people who have been crushed by this and had to sell boats, cars and homes, people who openly cried in my office after going bankrupt or left our industry to go find a day job. The collective losses we've sustained are in the tens of millions of dollars and climbing.
A trustworthy POS partner can help you stay in the game, and more importantly, win more clients, especially if you begin the relationship with clear objectives and established roles. In the end, you may find it worthwhile to share income with partners that respect you and your merchant relationships.
Want to know more? Keep reading The Green Sheet and follow me on LinkedIn at www.linkedin.com/in/allenkopelman. 
Allen Kopelman, a serial entrepreneur, is co-founder and CEO of Nationwide Payment Systems Inc. and host of B2B Vault: The Payment Technology podcast. Email him at allen@npsbank.com and connect on LinkedIn https://www.linkedin.com/in/allenkopelman/ and Twitter @AllenKopelman.
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