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Merchant-service providers with proprietary software or hardware systems, such as integrated point-of-sale systems or Apple Inc. iPhone applications, typically achieve higher client-retention rates than do providers selling off-the-shelf products, some industry observers note. If a provider develops a system "and it doesn't work with [other systems on the market], that merchant will have to stay," says Adil Moussa, an analyst with Aite Group, a Boston-based consulting firm. If a mMerchant is using a product that is compatible with multiple systems and and isthat is widely available, the merchant more easily "can move to another provider if they aren't treated well," he says. Conversely, switching away from a proprietary system can be more complicated. Because of this, merchants using a provider's proprietary system are less likely to switch to a competitor over concerns about transaction rates, notes Henry Helgeson, president and co-CEO of Merchant Warehouse Inc., a Boston-based ISO. Having proprietary systems "has helped us with attrition quite a bit," Helgeson he says. "Merchants don't leave over rates at this point," ." he says. Retention is "unbelievable" with United Bank Card Inc.'s Harbortouch proprietary point-of-sale system, agrees Jared Isaacman, CEO of the Hampton, N.J.-based independent sales organization. "The retention benefits are pretty obvious," he says.
