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When It Comes to Terminals, It's Out With the Old, In With the New

By Lisa Shipley

Have I got a deal for you! A refurbished name-brand laptop with a 386 processor. Interested?

All right stop laughing. Nobody in his or her right mind would buy a computer-new or refurbished-with a 386 chip, considering we're in a world of hyper-fast processors running at 1.5 - 2.5 gigahertz that do more, do it faster and more dependably.

Why in the world would you sell a terminal that is the equivalent of that old, slow technology (it is, after all, a mini-computer) to your merchants?

I know it sells for less-and some will try to convince you that less is better-but here's a reality check: That cheaper, older terminal is probably costing you more, and costing the merchant way more, than the perceived savings. If that weren't enough, neither of you can take advantage of the incremental profits that newer terminal technology offers.

New terminals on the market today sell for the same or nearly the same price as both older and re-built units; new models also come with warranties of up to five years.

If you're an ISO or Merchant Level Salesperson (MLS) in search of ways to cut costs, increase merchant retention, gain more of a competitive advantage, grow your profits and build a whopper portfolio that sells big when you're ready to go fishing, then I encourage you to read on.

Keep in mind that terminals are computers and remember that nobody stays with old computer technology for very long. New systems speed things up and allow you to do more in less time with fewer operating problems. Apply this thinking to selling, keeping customers, growing profits and managing your portfolio.

Looking at the cost side of selling old terminal technology, let's focus on the number of calls you and your help desk receive. If you're like many ISOs/MLSs, you're probably spending way too much time putting out little fires.

Even when you provide excellent help desk support, your merchants often want to speak with their agent-YOU. When they're calling you about a lot of simple things, you're not selling when you're on the phone explaining basic functions such as loading receipt paper.

Tally up how much time you spend helping merchants versus selling. Add to that amount your help desk expenses per hour: people, technology, phone line usage costs, office space and so on. What if you could cut those costs by 10, 20, 30 or 50%? What would that do to your bottom line?

Keep this in mind, too: Your merchants won't buy you champagne if they're plagued with terminal problems-but they may very well have a drink with your competitor.

Let's look at other causes of that annoying "drip, drip, drip" (sometimes a gush) of lost dollars with old-technology terminals. It's not cheap to hire, train and retain your help-desk staff; they may end up spending too much time and too much of your money handling basic problems. The number one help-desk call has to do with basic operational issues. In my experience, simple 'how-to' questions add up to nine out of 10 calls. Think how this overhead expense eats away at your profits. One major benefit of newer terminal technology is that it has intuitive software designed for 'dummies'-simple ATM-like functionality, user-friendly prompts, foolproof, jam-proof paper loading and so on. You'll be the merchant's hero when you demonstrate how newer terminals will simplify and speed things up and increase profit opportunities.

There are other kinds of expenses and losses you and the merchant might have to absorb when staying with old technology terminals. If you have to replace the hardware of an old unit, you'll spend a minimum of $125 and the merchant will understandably be furious over the downtime. There is also the telco expense from re-loading terminals-"drip, drip, drip," more money down the drain.

Transaction times on older terminals take too long to process, resulting in more phone time-and more money out of your pocket. New terminal technology gets the job done in less than six seconds because many terminals now use an Internet connection as opposed to a phone line to communicate transaction data.

Beyond the pure costs associated with old terminal technology, old units will not help you or your merchants increase profits. They do not offer the capability to integrate value-added programs, including pre-paid and loyalty cards, signature capture or check processing, that new terminals do.

One more key problem with old terminals-and this may be the most important of all-is that they make your portfolio vulnerable to competitors. Here's why: Old terminals have the memory capability of an amoeba (256k or less), so you'll be hard pressed to offer the value-added applications that need lots of memory.

Potential profits and customer loyalty for both you and your merchants are eliminated right off the bat.

If your competitors approach your merchants-and they will-you'll end up as the odd one out. That could mean you'll retire with far less money in the bank than you'd hoped for.

Let's focus on the opportunities and profits that happen when it's out with the old and in with the new. If you're the ISO/MLS who brings merchants new technology that their employees can learn quickly and offers equipment that doesn't jam up, break down or run out of steam, along with a dozen new profit opportunities (with a chunk of those profits for you, too), you will surely end up on top.

Not only can new technology at the point of sale be as simple to use as an ATM, its multi-year warranties and the 'curb appeal' will help you make the sale.

It's time to start thinking 'value proposition,' not 'old' and 'refurbished.' When it comes to POS terminals, older is not better.

These old devices won't help you keep customers, reduce your help desk and repair costs or increase sales and profits. They won't reduce complaints or help your merchants reduce employee errors and speed up their checkout lines.

There is one thing that old terminals will definitely do for you: They'll make you look like a 386 chip-and we all know where those end up.

If you're In Search Of ways to cut costs, maintain and increase your merchant base, add incremental profits, beat the competition and build a portfolio that will give you the lifestyle you want, then join the 21st century. Life will be easier and profits will grow for you and your customers.

Lisa Shipley is Senior Vice President, Hypercom Corp. You can reach her at

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