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This article appears in the February 26, 2009, edition of ISO&Agent Weekly.
Reselling Squirrel Systems' point-of-sale systems is augmenting restaurant sales involving pay-at-the-table terminals for Alpine Payment Systems, according to Robert Ensminger, president and CEO of the Vancouver, Wash.-based ISO.
The deal may provide an example of capitalizing on a niche.
Following a European trip a couple of years ago during which he was impressed by pay-at-the table terminals, Ensminger began selling Ingenico S.A. wireless terminals in 2008 and found success with restaurateurs.
Ensminger later approached Squirrel Systems about becoming a reseller because he wanted Alpine Payments to be able to sell to an expanded number of restaurants.
The Squirrel Systems deal enables Alpine Payment to integrate Ingenico terminals into Squirrel POS systems, which many restaurants want because of their ability to accept payments, manage tables and transfer sales data to accounting systems using a single system.
The ISO recently sent five of its staff members to Squirrel Systems' headquarters in Burnaby, British Columbia, for training.
Making Money
Part of the merchant pitch is that bringing the payment terminal to customers can prompt many of them to pay with a PIN-debit card, Ensminger says.
A restaurant with $300,000 in monthly sales may cut the $7,500 monthly cost of accepting signature-based debit and credit cards almost in half if 50% to 60% of its customers choose PIN debit as their payment, Ensminger says. That assumes the merchant is paying a 2.5% discount rate, which includes interchange, processor and acquirer fees.
In early pilots overseen by POS-terminal maker VeriFone Holdings Inc. at more than 30 restaurant locations, merchants saw 39% of their card transactions covert from signature to PIN-based payments.
Of consumers surveyed at those restaurants, 87% said they had a "high" sense of security using a tableside payment terminal, implying they approved of the card not leaving their sight to complete the transaction, according to San Jose, Calif.-based VeriFone.
Of course, for the ISO considering pay-at-the-table, the threshold is how much money these terminals can generate for the company and the agent.
While Ensminger declined to provide specific details on the structure of pay-at-the-table deals or how much the terminals sell or lease for, he did say that Alpine Payment salespeople receive a percentage of the deal up front and earn residual income that grows to 50% vested after a year and to 100% vested after two years. The deal is the same for independent contractors and Alpine Payment's own sales staff. The ISO has about 32 internal salespeople, he says.
Training Sales Agents
Incorporating wireless terminals for restaurant use requires additional agent training, but Ensminger says the training is not too complicated. He likens it to knowing how to install a cordless telephone in a residence.
An agent sets up the base station and connects it to a high-speed Internet line. The terminals pair with the base station as a Bluetooth headset pairs with a mobile phone, according to Ensminger. The terminals use Bluetooth connectivity to communicate with the base station inside the store. A typical Bluetooth device has a range of 30 feet.
Base-station placement is critical to ensure strong signals throughout a merchant location, Ensminger says. "We survey the signal from every location," so the connection is not prone to disruption, he says.
Alpine Payment's installation department perfected the installations within five months, Ensminger says.
As Alpine is training the dozen independent contractors affiliated with the ISO in installing the systems.
Set-Up Options
Merchants typically have three options for setting up an Alpine Payment pay-at-the-table system, Ensminger says.
One is a standalone setup that requires manually closing out the day's transactions.
A second option is to program an existing POS machine, such as an electronic cash register, with a capability that allows employees to designate a transaction made with the wireless terminal. At the day's end, the pay-at-the-table transactions will appear on the automated transaction reports generated by the system.
The third option is integrating the wireless terminal into a POS system, Ensminger says. In Alpine Payment's setup, all card transactions go through the Ingenico device and not through the payment software on the POS system, he says.
No matter how much work goes into making pay-at-the-table an easy conversion for merchants, if the compensation plan for sales agents does not account for the extra work versus a stand-alone terminal, they will not be as motivated to go through the effort, says Ensminger.
