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Companies like Square and Shopify are trying to overturn the traditional model of credit card transactions with new hardware, user-friendly tablet interfaces and out-of-the-box payment processing services. It’s rare to see a company actually trying to work within the old-school realm of traditional payment networks, characterized by clunky card-swipe terminals, printed receipts and direct bank relationships.
Yet a Palo Alto startup called Poynt is coming out of stealth to do just that. It’s trying to reinvent with the traditional point-of-sale terminal using the latest technologies and development principles coming out of the financial startup community.
The terminal will run on Android, will have a developer community and app store and will accept any kind of payment, whether it’s beamed in by Apple Pay or authenticated by a chip embedded in your credit card, said Osama Bedier, Poynt CEO and founder. Bedier has some pretty strong Silicon Valley credentials: He headed up Google Wallet until 2013 and did product development at PayPal for eight years.
Poynt is developing a point-of-sale terminal that will be distributed to small and mid-sized businesses by the usual means: supplied by banks and linked to traditional payment processing services like First Data and Chase Paymentech. Poynt doesn’t want to overturn the long-standing relationships between banks and merchants, Bedier said, but it wants to provide a terminal that is much more sophisticated, flexible and upgradable than the standard cash register keypad-and-mag-stripe reader.
“Store payment technology has been built around what is basically a glorified calculator,” Bedier said. “Instead of creating another calculator, we felt we could do better. We could do for merchants what the smartphone did for consumers.”
Poynt’s business model is very similar to that of Clover, which has built a sleek tablet-style cash register running on Android with its own complement of apps. The difference is that Clover is now owned by First Data, aligning it with one of the top five clearinghouses for credit card transactions. Poynt hopes to remain neutral, offered by every major bank from Chase to Bank of America.
The bells and whistles
The Poynt terminal is a dedicated piece of hardware similar to an NCR or VeriFone rig, but it has a 7-inch tablet-like interface on its merchant-facing side and a 4.3-inch touchscreen on the consumer end, where customers can swipe their cards, enter PIN or zip codes and sign for a purchase. The two ends of the device are separated by their own encryption, passing just enough information back and forth to authorize a transaction, Bedier said.
But the most interesting parts of the terminal are buried below its touchscreens. Bedier said Poynt is designed to be a product a merchant can use for the next ten years, supporting not just new the chip-and-PIN credit card transactions that will begin replacing magnetic stripe payments next year, but also near-field communications systems like Apple Pay, Soft card and Google Wallet.
The terminal has a QR code scanner that can read gift or loyalty cards and even accept future payment systems like CurrentC, the mobile wallet backed by Walmart and other big U.S. retailers. Bluetooth low energy is embedded so it can act as beacon for payments and presence-based marketing. And yes, it has an old-fashioned mag stripe reader, as Bedier expects the traditional card swipe will be around for some time. There’s also an embedded receipt printer as well as Wi-Fi and 3G/4G connectivity to connect back to the payments network.
The operating system is a forked version of Android, so you won’t be downloading any apps from Google Play, but that’s largely the point, Bedier said. Poynt plans to build a development community of financial and retail apps that can foster and a huge degree of customization on its terminal while still meeting the strict security guidelines required by the banking industry.
The Poynt terminal will come with its own bare-bones point-of-sale app, but the company will offer numerous third-party POS apps, starting with Vend. Five other developers have agreed to customize their apps for Poynt, including foot-traffic analytics provider Swarm and QuickBooks software maker Intuit. Bedier said he hopes to attract a diverse set of apps ranging from online marketing tools and inventory trackers to the new breed of loyalty programs such as Belly and Fivestars.
App distribution is where Poynt plans to make its money, taking a percentage of software subscription fees to merchants, Bedier said. It won’t take a percentage of the transaction, and it plans to sell its terminal at cost. Right now it’s taking pre-orders for $299 and expects to ship the device in the first quarter.
Timing will be critical, as the U.S. retail industry is undergoing big transition from mag stripe to EMV chip-and-PIN transactions, which will require every merchant big and small to replace its point-of-sale hardware. Bedier is hoping that Poynt can take advantage of that massive overhaul by convincing retailers to replace their “glorified calculators” with its more modern terminal, but it’s not the only company with that idea. The aforementioned Clover is going after the small retailers, and traditional terminal makers like NCR have created their own takes on the tablet point-of-sale system.