Harbortouch gives away POS systems to capture transaction fees

The financial services company subsidizes hardware and software for small restaurants and retailers, in exchange for a five-year-long merchant processing relationship.


The most important investment that a small restaurant or retailer must make is in a decent point-of-sale (POS) system to keep track of trends, orders and inventory. The rub is that any company in start-up mode probably doesn't have the upfront cash to spend on one.

That's why Harbortouch Systems is giving its POS hardware and software away -- in exchange for a five-year commitment to its transaction processing services. You knew there was a catch, right? Especially since typical merchant agreements are usually in the three-year range.

Not surprisingly, Harbortouch started its life on the financial services side -- it serves about 140,000 businesses around the United States -- usually small companies such as dealerships, restaurants, and e-commerce merchants and mom-and-pop retail operations, said Jared Isaacman, founder and CEO of Harbortouch, which started life as financial services company United Bank Card.

The company changed its name when it started focusing on and developing POS equipment -- ranging from traditional systems to tablet and table-side devices. The value of these systems runs anywhere from $20,000 to $30,000, Isaacman estimated.

"We can give the solution away at no cost to get the financial services business," he said.

Harbortouch is targeting companies with at least $150,000 in sales annually, up to about $5 million. It considers upwards of 2,000 merchant applications per month - when a small business applies for an account, it makes its POS technology request and most companies get what they request, Isaacman said. Once the five years are up, the small business owns the equipment outright, he said.

Harbortouch's fees are competitive with other processing companies, although Isaacman didn't offer specifics.

That said, five years is a very long commitment to anything right now (it's longer than a U.S. presidential term!), so any small business considering this scenario for meeting its POS needs is well-advised to read the fine print of the contract and be sure to ask questions about hidden fees that might apply outside the terms of the basic service.