The True Cost of Stand Alone Payment Terminals

Over the last couple of weeks I was asked to meet in person with retailers that are concerned about costs related to using stand alone payment terminals versus payment terminals that communicate directly with their point of sale software. To keep things simple, we only looked at the numbers and ignored other factors like reconciling two close out reports each day or whether the stand alone payment terminal was customer facing or not.

To "set the scene", each retailer is using the Microsoft Dynamics RMS point of sale software and has a single check out lane. The average transaction amount across all stores is $48.00. They are averaging two errors per month with the typical error being that the total is entered as $4.80 instead of $48.00 on the stand alone payment terminal. None of the merchants are contacting the cardholders to ask for the $43.20 difference due to the error being the employees fault and/or not having any way to track down the cardholder. They are not experiencing over-tendering costs as the cardholder does notice this and contacts the store for a refund.

So, here are the 5 year costs for a stand alone payment terminal:

1. Average purchase transaction amount: $180.00
2. Loss due to average error of $43.20/twice a month x 12 months x 5 years: $5,184.00
3. Total 5 year cost for stand alone payment terminal: $5,464.00

Now compare that to an integrated solution like Card Defender for RMS:

1. Single lane Card Defender typical complete upfront deployment cost: $1,350.00
2. Card Defender $10/terminal monthly support charge x 12 months x 5 years: $600.00
3. Total 5 year cost for Card Defender: $1,950.00

Wow - I've spent a lot of time checking and re-checking the numbers above but they are true and correct. While retailers may scoff at the up front costs of Card Defender, they fail to see the true long term costs of using a stand alone payment terminal.  

Of course each retailer is different but the above information combines data from multiple very different retail stores. Note that some of these retailers have had their stand along payment terminals in place for several months so the errors are not a training issue - just an ongoing human factor issue.

This demonstrates some of the hidden value in Card Defender that many retailers may not be aware of. If you would like more information, or for me to run through the numbers based on your store, please contact me at 208-340-5632 or kevinantosh@gmail.com. 

Point of Sale Buying Tip: What to Include to Calculate True Cost of Ownership

Whether you define TCO as "True Cost of Ownership" or "Total Cost of Ownership", it is important to factor in all costs over time to ascertain how much a point of sale system will cost you over an average five to seven year period.  A lot of times it is easiest to create a spreadsheet so you can compare costs for various point of sale solutions in a "side by side" layout.

If you are considering a "pay as you use" system or leasing. then you can multiply the payments out. In the case of a "pay as you use" system, I'd recommend multiplying the monthly payment by 72 as 5 - 7 years is how long a typical point of sale system will last.

Here is an actual example - only the names have been changed to protect the innocent:

Store with one point of sale system as a “register” & one point of sale system in the office as a “manger”	System A – Windows Outright Purchase	System B – Tablet Purchase Hardware but pay monthly fee for software & support	System C – Windows Lease everything for 5 years (and own outright at the end of 5 years)
Software	$2,860.00	$9,288.00
Hardware & Peripherals	$2,689.00	$2,350.00
Training	$1,200.00	N/C for initial overview
Installation Labor	$1,980.00	N/C – self install
Paper and Labels	$179.00	$179.00
Accessories (UPS, etc)	$200.00	$200.00
Supplies years 2-6	$895.00 ($179/yr)	$895.00 ($179/yr)	$895.00 ($179/yr)
Equipment failure/yrs 2-6	$2,500.00 ($500/yr)	$2,500.00 ($500/yr)	$2,500.00 ($500/yr)
Annual Support years 2-6	$2,750.00 ($550/yr)	Included	$2,750.00 ($550/yr)
Software Upgrades yrs 2-6	$1,160.00 ($232/yr)	Included	$1,160.00 ($232/yr)
TCO (over 6 years)	$16,413.00	$15,412.00	Will depend on interest %

A video explanation of the above chart can be found at the bottom of this post.

Obviously there are many variables but system A and system B represent the most popular windows based and tablet based retail point of sale systems on the market today.

TCO information does not include merchant services fees as these fees vary greatly from merchant to merchant.

You can draw your own conclusions related to how similar the long term costs are between a windows point of sale system that you purchase and a tablet based point of sale system that you pay an ongoing monthly fee to use.

Confused as heck now or in need of some unbiased point of sale advice? Then visit my contact page for various ways to reach me.

Here is the video explaining the chart: