A Startup Player Wants To Be the Common OS for Smart Terminals

Poynt Co., a startup supplier of intelligent payment devices, argues so-called smart terminals should have a common operating system like smart phones do. And in the course of announcing a $100-million funding round last month, the Palo Alto, Calif.-based company also argued it should be the one to provide that OS.

Investors in Poynt’s Series C raise include Elavon, a major payments processor and a unit of U.S. Bancorp, and National Bank of Australia. Poynt will use the funds to expand its talent base, invest in its product, and pursue “its vision to become the operating system (OS) on smart payment terminals worldwide,” according to a release from the company.

Four-year-old Poynt, whose L-shaped device relies on a collection of apps that can support a variety of merchants’ business needs, says it has shipped 150,000 units in the past 16 months, and it projects its installed base will process more than $25 billion in transactions in the course of the next 12 months. Some 8,000 developers have now written applications for the Poynt device.

And besides Elavon, which came on board last year, several more banks and processors have signed on to support Poynt over the years, including Evertec, Worldpay, JPMorgan Chase, Itau Unibanco, Alipay, Nexi, EVO, and Mashreq Bank.

But the company leaves no doubt its major thrust will be to create a unified operating system for the burgeoning market for smart POS devices. The common OS, it says, will drive up efficiency by allowing apps to run on any device.

“Smart phones changed the way we search, buy, and communicate—not only because the hardware was beautiful, but because iOS and Android transformed a ubiquitous utility into a platform for innovation where developers could build once and distribute everywhere,” said Osama Bedier, Poynt’s founder and chief executive, in a statement. “Our vision is to transform retail by becoming that innovation platform for payment terminals everywhere.”

Don’t look for this vision to materialize any time soon, some observers caution. They point to a payments world that now includes competing devices from the likes of Square Inc., First Data Corp. (Clover), Verifone Systems Inc., and North American Bancard LLC.

“It’s a long way from developing a standard to ubiquity,” says Thad Peterson, a senior analyst at Aite Group LLC, a Boston-based research firm, in an email message. “The legacy players are already populating their … payment systems with apps that enhance the functionality of the terminal, like Clover from First Data.”

But by creating an OS that works across a spectrum of smart devices, Poynt just might lock in the relevance of its app store for outside developers. “Developers need to focus on the operating systems that can provide the most downloads,” says Rick Oglesby, principal at AZPayments Group in Mesa, Ariz. “That normally means the ones that attract the most eyeballs. If Poynt’s OS is tied only to its hardware, the eyeball exposures are more limited, so this is a very smart move.”

Even so, while he agrees that “an open system in POS would make a great deal of sense” and “may well be the future of POS,” Peterson argues that “it’s going to take a long time before critical mass is sufficient to drive adoption of an open OS by competitors.”