Why U.S. Bancorp is investing in the static point of sale

Daniel Acker/Bloomberg

Turning smartphones into payment terminals is now as easy as downloading an app, but U.S. Bancorp is betting there's still a sizable interest in terminals that both take payments and help with business management tasks. 

The bank's payment processing unit Elavon has added several features to its talech point of sale system, called talech Terminal, to enable small businesses to accept payments and manage other parts of their business while minimizing IT work and expense. 

At the same time, smartphone-only payment systems called softPOS, or Tap to Pay, are expanding rapidly because they forgo any extra hardware investment. Both Apple and Android offer versions of softPOS, but require partners in the payments industry to connect to merchants and process transactions. Elavon supports softPOS, but said it's not always the best option.

"While we think there is a place for a softPOS system, there are times when a dedicated device is the preferred payments solution," said Joy Ghanekar, head of product at talech. 

Talech Terminal handles credit card surcharging, inventory management and employee services. The product builds on talech Register, which was released in 2022 and combines payments and business analytics. U.S. Bank acquired talech, a firm that sold business software and payment technology, in 2019.  

Talech rents its technology to small businesses, and says this pricing model can save hundreds to thousands of dollars in upfront fees that merchants would pay to buy the technology outright. Talech's product set includes a point of sale terminal, printer, QR code scanner, card reader and cash drawer. Restaurant versions include a kitchen printer. 

Elavon's talech competes with Fiserv's Clover point of sale system, as well as merchant acquirers and fintechs that focus on small businesses — such as Stripe, Block and PayPal. Whether it's a fintech adding services or a large bank squeezing more of its offerings into a terminal, the end result is that merchants can get what they need from fewer vendor relationships.

In an email, Pratap Gautam, head of GBS product strategy for M&A integration at Fiserv, said "Clover provides multiple flexible payment options for SMB merchants. These include existing mobile features from Clover Go – including the ability to connect multiple point-of-sale devices, securely accept offline payments, and access a unified view of their business." Tap to Pay on iPhone capabilities can be enabled by downloading the Clover Go iOS app, and then either used as a standalone payment acceptance solution without additional hardware or alongside a merchant's existing Clover POS system, Gautam said.

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Elavon envisions uses such as restaurants organizing table layouts, updating menus and managing employee schedules. It also embeds the payments and business management products that are available on talech with U.S. Bank's business-oriented financial services, combining payments with bank products such as credit to meet short-term capital needs.  

"The merchant can unbox the device, sign in and start accepting payments in minutes," said Ghanekar. "And having a layer of software that sits on top of the device makes it easier to deploy and add new features." 

Point of sale devices will likely exist alongside softPOS for some time. Since softPOS was introduced about two years ago, payment companies have been adding the feature, often as a way to sell payments technology for both e-commerce and in-person sales. Stripe, which is using softPOS to bolster its ability to power in-person payments, is part of this trend, as is Adyen, which introduced new online payment features, in-store terminals and support for softPOS at around the same time. In Adyen's case, the Dutch processor was also plotting an expansion to the U.S.    

JPMorgan Chase recently adopted Tap to Pay, a move designed to replicate the e-commerce experience in stores. Since JPMorgan Chase is the largest U.S. acquirer, that will likely pressure other large merchant acquirers to adopt the technology. Elavon added Apple Tap to Pay in May and Android softPOS in August.  Elavon is the No. 7 merchant acquirer in the U.S. by volume, with about 3.3 billion transactions processed in 2022, according to Statista.

"SoftPOS is advantageous in that it can remove almost any cost of paying for a payment device," said Daniel Keyes, a senior analyst for merchant services at Javelin Strategy & Research. But dedicated terminals are "more substantial," Keyes said, adding that they can be placed on a surface such as a counter, which is awkward with a smartphone. 

"Additionally, and this is the  real value, on a terminal you have full control of the software and the value-added services," Keyes said  "With Apple or Android you can add other services via an app but you have to work in their ecosystem." 

Elavon views softPOS as an option to enable payments for certain merchants that accept funds directly at the point of service, rather than as a replacement for countertop devices.

For merchants that have a larger store footprint, dedicated devices can accept a wider array of payment types than just Tap to Pay, Ghanekar said. "Devices can also have a longer battery life, and a streamlined user interface. Maybe most importantly, for some businesses it can separate the payment experience from their personal phone." 

Elavon's talech seems to be "more than a terminal," according to Zil Bareisis, head of retail banking research at Celent, in an email, adding that it's a device through which a small business can run elements of its operations. 

"SoftPOS/Tap to Pay solutions are great as they can provide payment functionality on any smartphone or tablet that a store's owner or staffer might already own," Bareisis said. "However, depending on your size and focus, a dedicated 'smart' terminal which can also do more than payments but is designed to support your business can be a lot more attractive. … There is no 'one size fits all' approach to serving merchants, and an acquirer needs to have multiple tools in its arsenal."