Merchant service provider United Bank Card, which pioneered the “free” equipment boom in the merchant acquiring industry with programs offering both countertop card terminals and electronic cash registers, is now extending its business model to its Harbortouch point-of-sale system, Digital Transactions reports. According to Jared Isaacman, UBC’s chief executive, the tactic’s primary goal is to retain merchants who contract with UBC for card payment services. He implies that merchant discount rates will be reasonable since the ISO’s ROI for the equipment will be offset by long-term merchant retention.
Many merchant-acquiring industry observers have decried the free-terminal tactic, which has been copied over the years by many other ISOs, as a drag on margins, but UBC chief executive Jared Isaacman says that’s not the case, at least for his company. Any loss in upfront equipment revenues will be made up over time, with no small boost to profitability coming from reduced merchant attrition, he tells Digital Transactions News. Isaacman expects the typical merchant using UBC’s Harbortouch-brand POS system that does more than run-of-the mill card processing to stay with UBC four to seven years or even longer, at least twice as long as the average merchant with a conventional, limited-function countertop terminal. “Merchants don’t leave when they have a POS system,” he says. “With that we’re willing to extend our return on investment.”
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