Update June 13th, 2013 - Thanks to the comments on this blog post, conversations with Harbortouch users, and conversations with Harbortouch, I am now an approved Harbortouch reseller. You can read more by clicking here. I will be keeping everyone informed on how the first series of installations go.
I've talked about this in the past but a recent recruitment letter from Harbortouch reminded me that I should remind you that there is no such thing as a free point of sale system. If Harbortouch is truly shipping over 1000 point of sale systems each month (which is what the letter stated), then there are a lot of small business owners who are either willing to put up with higher merchant services fees or just don't have budget to purchase, lease or or finance a point of sale system.
What do I mean by "put up with higher merchant services fees"? The letter from Harbortouch states that the dealer will double their average monthly residual (this is the amount that your merchant services salesperson makes off of your credit card processing fees). The letter also states that higher margins are possible as well.
The most likely scenario is that Harbortouch simply charges more in credit card (merchant services) fees. It may not sound like much but even a 1/2% difference can mean that the business owner is paying $2,500 more per year in credit card (merchant services) fees. $12,500 over the course of five years (typical minimal lifespan for a point of sale system) is not free. In fact, with point of sale systems running around $3,000 - $8,000, $12,500 is much higher that what you should be paying.
Still convinced that Harbortouch is a good deal? They also pay the person selling each system up to a $500 commission (source: Harbourtouch dealer ad March 2013). I wonder who actually ends up pay for that commission?
Are you in the US and in need of no cost retail point of sale advice? I'm happy to help and can be reached on my cell at 208-340-5632 (mountain time) or via email at firstname.lastname@example.org.
I would like to make a few comments & clarifications.ReplyDelete
1. Harbortouch is advertised as free when compared to the big brands like Micros & Aloha. A micros dealer will charge you to purchase the system plus a service/support contract. 60% of Micro's profit (corporate) is not from the sale of systems, but service & support! The price Harbortouch charges for the service agreement is generally about the same or less than Micros for example. So that's how they are able to claim it is free. Plus, you are getting lifetime hardware replacement & tech support. Show me any POS company that offers that. Unlike any purchased system, Harbortouch is spending a lot of money in R&D. If and when they come out with more features in the future, if they are free, merchant automatically receives them. Such as their free reservation system they came out with last year. Does any other traditional POS company development more products & features and give them to the merchant for free? The big brands charge for everything extra.
I sell Harbortouch and another purchased system. I believe Harbortouch is selling that many units. Why? I hardly close the system that is a purchase. Harbortouch usually wins all the time. Why? Because of the pricing they offer and everything they are including and providing.
2. Credit card fees are not higher. I tell merchants all the time I will beat or match their fees. What Harbortouch is talking about in that letter is this. Since you are now offering a POS system, you are able to land bigger volume restaurants as they usually always have a POS system. So by offering the product they need, you are attracting bigger volume accounts, which in turn usually means more profitable accounts. Not because their fees are higher but because of their volume. A 0.25% profit margin on $2,000 volume is not the same as $100,000.
3. The merchant isn't paying for the commission. It is something Harbortouch is paying for to acquire the account. Please remember Harbortouch doesn't have a sales team. So they are avoiding all of the expenses that come with having a sales team, advertising the product, etc. Us agents are their sales team. So instead of having in-house employees selling their product, they are paying us.
I have been with Harbor Touch for 3 years and count down the days that my contract expires. I was told at signing that they would save me money. LIES, in reality my merchant services have almost doubled. When I call to have my account looked at to reduce my merchant fees they reduce them, but than a couple weeks later we are informed of a increase again. I have also had my per swipe fees increase. They work the numbers to make it appear like they are saving you money. I would tell anyone that is looking at this system to be very cautious. When I contacted them and told them I was told I would save money on my processing but it almost doubled they denied that they told me that. Harbor touch as a system I like it is the processing that is horrendous. RUN RUN RUN from this company. crooks, liars, and con artists is all they are.Delete
Appreciate your comments and input Curtis. I'd strongly encourage any business owner considering Harbortouch to do two things: 1) Calculate a Total Cost of Ownership comparing Harbortouch versus a traditional point of sale system (be sure to factor all hardware, software, labor, merchant services fees, and on-going support costs) for a 5-7 year period and 2) check out these websites: http://www.zdnet.com/harbortouch-gives-away-pos-systems-to-capture-transaction-fees-7000005647/ and http://www.cardpaymentoptions.com/credit-card-processors/harbortouch/ReplyDelete
No two businesses are the same so the Total Cost of Ownership calculation will help determine which solution is more cost effective in the long run.
I do not believe processing fees should be included in that calculation. Most of HT agents if not all will match any processing offer. So that essentially would be the same regardless of the POS.ReplyDelete
TCO is hard to calculate with HT for they are providing lifetime replacement warranty. How do you put a value on that? If a merchant's POS dies in 3 or 4 years, they will have to spend money replacing it and that can get very expensive, especially for onsite support & repair. Restaurants is a very harsh environment and I do not see many POS systems going 5 years without some kind of issue. Especially technical support. You may not need it often but you will eventually, matter of when, not if.
Plus, unlike any purchased system, Harbortouch is continuously pouring a lot of money into R&D. If they come out with more features in the future and if they are free (which all have been thus far like their back office and reservation system), you automatically receive them. Most purchased systems like Micros charge you for everything extra. You want tires on those wheels? That will be extra.... Harbortouch's CEO is driven to make HT a well known POS brand and truly reinvesting money into the company to make that happen.
Also in response to some of the negative comments online about HT, some I'm sure are legit. Many are not, they are obviously written by the competition. HT really shook things up when they launched their free POS program. So much that Micros started advising their vendors how to sell against HT.Delete
Thanks again Curtis - your comments are very helpful. On including merchant services in Total Cost of Ownership calculations, 2 years ago I would have completely agreed with you. However, in my travels I have had the opportunity to view merchant statements from businesses using both Harbortouch and Intuit QuickBooks Point of Sale (as both of these companies force the user to use either their merchant services or a separate credit card terminal) and in all cases (around 30 in the last year) I found that the merchant was paying 1/2% higher than what other merchant services companies would charge.Delete
What I advise retail and restaurant owners in my workshops is that, if they choose a system that offers no choices when it comes to merchant services, then either plan on using a separate credit card terminal (which is not very effective) or plan on being charged above the going rate for merchant services fees.
You comments about hardware failures and upgrades to the software are awesome! That is exactly why the Total Cost of Ownership calculation needs to include on-going support like hardware and software maintenance. Some companies include everything in one monthly fee (like Clover) while others charge an annual fee (like NCR CounterPoint, Microsoft RMS, etc.).
I realize that it is easy these days for someone to post overly negative fake reviews which is why I included a link to the BBB summary. I'm sure that you also recommend that each potential customer does some "due diligence" and talks to business owners using the solution that they are considering to get some "brutally honest feedback" on the system.
The agent sets the credit card fees. Most existing accounts I see are paying more than my standard pricing. They are more than free to go find the best deal and I will match it. POS & processing are becoming more intertwine. I do not see many POS systems not tied to the processing 10 years from now.Delete
There wasn't any links to the bbb.
Hey Curtis, do you think you might want to mention that you work for Harbortouch? It seems odd to me that a company who isn't ripping people off spends SO much time online reassuring potential customers that they aren't going to rip them off. Perhaps a guilty conscience? Also, that bit about removing processing fees from the equation is the kind of self serving advice I'd expect from a scammer. If I'm locked into Harbortouch's credit card processing for 3 years, that's probably where I'll be getting screwed the hardest. Free POS indeed!ReplyDelete