POS Systems have Changed – 'Let the Merchant Beware'

In this year's POS survey, 824 of our members shared their choices and comments on more than 100 different POS systems. Their responses include key insights on how much they spent, and their satisfaction with the quality of support, reporting, functionality, and back-office features.

But some of the most interesting revelations centered around how POS providers have moved from a single purchase model to recurring subscriptions and locked-in contracts.

Reducing upfront cost and shifting to ongoing fees is an approach that makes acquiring the system more affordable but increases monthly expenses for the operator. Our survey found that these monthly fees have increased dramatically, running almost three times as high as they were in 2017.

Additionally, roughly half of those surveyed noted they were locked into using the POS provider's own credit card processor and, in many cases, this was a point of friction. More than one respondent told us something to the effect of "[the] credit card processing fees are too high. We would like to be able to use our own processor."

Let the buyer beware.
— Latin Proverb

Perhaps the good news worth noting is 51% of respondents to the 2022 RestaurantOwner.com Member POS Survey indicated they had contracts that allow them to use any credit card processor they wish. But that is not universal.

And early termination of the POS system service contract could bring significant penalties, particularly if the provider's contract includes a "liquidated damages" clause. Onerous contract terms appear to be waning among POS system and credit card processing providers. Still, a POS system provider is counting on a certain stream of revenue from merchant credit card transactions, it will incur a big loss if the merchant walks away from the deal.

We have found that most POS providers are very customer oriented and genuinely want to make their customers happy. But not all contracts are equal. For this reason, restaurant operators need to have their eyes wide open before jumping to a new POS or credit card processor. Here are a few things to consider before switching.

• Check your current contracts before entering into a new agreement with another provider. Make sure there are no early termination penalties.
• Read all POS and credit card processing contracts carefully before signing. Ask your attorney to review it if necessary.
• Be sure you understand the penalties and cost should you terminate the contract early.
• Compare credit card processing rates to that of other processors.
• Negotiate – you won't get a better deal unless you ask.

For more information on our 2022 POS Survey please visit www.restaurantowner.com/POS2022

Have a productive week!

Jim Laube & Joe Erickson