Payments Views

Allen Weinberg

Merchant App Stores Today

In what seems quite a number of years ago, back in 2012, Merchant Warehouse (now Cayan), announced what I think was the first “Merchant App Store”, marketed as the Genius Customer Engagement Platform. Running on a somewhat traditional Verifone MX915 terminal, it was an early forerunner to the current iOS and Android-powered tablet-based offerings. I loved the idea back in 2012, (and have been a cloud-based POS fan for years), but it’s been awhile since I’ve checked in to see where the industry is, particularly from the developer perspective.

As in the consumer-centric Apple App Store and Google Play, the potential benefits to developers are enormous, especially wide distribution at a reasonable price. I can’t even count the number of great ideas that have come through Glenbrook’s conference room that have ultimately failed since they just couldn’t get to market cost-effectively. This is particularly true for those trying to serve small and medium-sized businesses (SMBs).

I’ve checked in now with a number of developers as well as with platform providers (e.g., the tablet-based or purpose-built POS providers). A few things are clear:

  • It’s early in the game
  • It’s more complicated than throwing an “Angry Birds” game on Google Play
  • There’s a lot of thoughtful effort and meaningful resources going into this space by some (but not all) POS providers
  • The potential benefits to the POS providers, acquirers, and developers are meaningful but still elusive
  • Despite a few “hairballs”, it’s not that hard for a decent developer to get their apps onto multiple POS platforms

It’s Early in the Game – Even in the most popular merchant app stores, there are just over 200 apps available right now. But the potential is enormous – time and attendance, enhanced inventory and sales analytics, sales tax services, etc. It’s clear to me that, just like the Apple App Store and Google Play, POS platform providers such as FDC’s Clover and Poynt understand that there’s an economy-of-scale race going on. As they get more apps, it becomes more appealing to merchants, and the more merchants a platform gets, the more attractive they are to developers.

But it’s still Early Days. The small merchant is a busy person who doesn’t have time to experiment with dozens of third party apps in order to find the handful that could revolutionize their business. One participant in this ecosystem reported that these merchants generally install just two third party apps. Even if that’s low, it suggest how different merchants are from consumers using an app store.

Merchant Apps vs. Consumer-Centric Apps – paraphrasing an executive at a big-name acquirer, putting a merchant service in the POS app store isn’t like throwing another Angry Birds in front of consumers. Unlike consumer-centric apps, even paid ones, merchant apps must be held to a higher standard as it pertains to performance, value, and safety. Merchants expect that from their payment processors, and naturally expect the apps they use and buy from their providers to be of the utmost quality and value. In short, acquirers face a lot of reputation risk from the apps they offer to their merchants.

Wooing the Developer – based on conversations with developers and some platform providers, there’s a significant amount of time, expertise, and resources going into making these app stores both feature-rich and easy for developers to create their apps. Extensive code libraries for a variety of payment functions, RESTful APIs, SDKs, and developer support are a pre-requisite for attracting developers (OK, a large base of merchants also helps, but you get the idea).

Conversations with developers, for example, indicate that it’s easy to connect to multiple acquirers (as applicable), fetch POS data from the cloud, test their apps, redirect to the developer’s enrollment pages, etc. In addition, some are even providing marketing support to their developers to help spur sales.

Largely driven by these developer-friendly investments by the POS platform providers, as well as the use of the ubiquitous iOS and Android OS derivatives operating systems, developers can generally port over their apps from one OS to another in just a few weeks. In addition to the tools provided by the platforms themselves, there appears to be a wide and growing support base of developers more than willing to help out others.

One technical area we’re watching is the split between device and cloud-based applications and the ease of integration. Cloud-based services just need to present a standard API to all comers. Device-specific code can call on those web-based services. Some developers will have to carefully evaluate where to spend their efforts: on a broad-based cloud service or on app store-specific code. Obviously, there are functions that only an app can perform but in this age of omnichannel payments and commerce cloud-based services can touch activity at the POS and online.

Potential Benefits are Enormous – The payoff for acquirers is enormous, particularly regarding reducing merchant attrition. While the large, Tier 1 and Tier 2 merchants don’t change acquirers frequently, merchant turnover for smaller merchants is a decades old problem. It is not uncommon for acquirers to see 20% – 25% (or more) annual turnover of their small merchants. The nice way of saying this is that the average merchants stays with their acquirer for 4-5 years. But in reality, the average acquirer has to bring on 25% more merchants each year just to break even.

It’s quite reasonable to believe that these new POS/business management systems not only bring new revenues in a cutthroat pricing marketplace, but perhaps more importantly, keep those merchants longer. From a merchant retention standpoint, this may really be a “game changer”

Hairballs and Speed Bumps Could Slow Down the Serious Developers – Some notable systems are based on iOS or Android derivatives (e.g., Clover and Poynt are built on their own customized versions of Android). As such, developers may not have access to some functionality such as Google Maps, and iOS developers may have to deal with multiple users/profiles on iPads, but most seem to be able to work around that with other solutions.

But uptake is rarely about technology alone. Human nature and existing business models may slow the success of these merchant app stores. The major acquirers providing or offering these new platforms rely on their existing in-house and/or ISO sales organization to distribute these cool new tools. But that’s the same sales channel that’s been selling merchant services and countertop terminals for decades. Getting a new, more expensive cloud-based system onto a merchant’s counter may be a stretch. Getting that merchant to install a third party data analytics app, for example, could stretch the skills of that sales rep even further.

Some developers, of course, have taken the direct sales route. While that adds cost back into the business plan, that’s certainly worked for Square.

In short, I remain quite enthusiastic about these new POS systems in general, and love the idea and the progress, albeit a bit slow, of the merchant app stores.

I’d love to hear your thoughts!

This Payments Views post was written by Glenbrook’s Allen Weinberg.

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Charlie Wilson
5 years ago


As a developer working on some of these platforms today, I can say that your summary is sound.

I’ll expand on a couple of your points:

1) “It’s more complicated than throwing an’Angry Birds’ game on Google Play”

True, but this should not be a surprise. Those who have been around payments know that distribution is king and channel dynamics in this industry are incredibly nuanced. Success requires more than the technical ability to publish on these platforms. Active and intelligent management of the channel dynamics are also required to realize meaningful reach — and this is the hard part.

2) “There’s a lot of thoughtful effort and meaningful resources going into this space by some (but not all) POS providers”

True, again. A nice combination of hardware and/or software perhaps coupled with some media buzz may elicit a developer’s curiosity, but it will not convince developers of the best applications and services. Those POS providers who make a genuine commitment to help developers succeed commercially will reap substantial benefit themselves. Some do; others pretend to. And, of course, the POS provider must also put in “thoughtful effort and meaningful resources” to build a real base of merchants.

3) “The potential benefits to the POS providers, acquirers, and developers are meaningful but still elusive”

It is early, but the benefits are real. I can tell you we have meaningful traction. I can also tell you that – given the functionality of our app coupled with our focused energy against it – we’re helping the POS providers close more POS (and related merchant account) sales than you might imagine.

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