Heartland’s Decision to Wind Down Leaf Throws Spotlight on Tablet Software

Merchants using Leaf, a tablet-based point-of-sale system that its owner Heartland Payment Systems Inc. is winding down, will continue to be supported, but there will be no further sales of the system, Leaf president Sarah McCrary tells Digital Transactions News.

The expense and complication of supporting hardware to accept chip cards bearing the EMV chip card standard are to blame, she says. McCrary says the Leaf brand will end, too.

Meanwhile, some observers say the decision to wind down Leaf could be an early indicator that the 5-year-old tablet point-of-sale market is undergoing a shakeout. More apparently, it shows the market’s emphasis is shifting from hardware to software, they say.

Heartland announced last week that it was ceasing Leaf hardware development, but could continue with software development, and was planning to roll the remnants into Heartland Commerce, a division that includes Xpient and recent acquisitions Dinerware and pcAmerica, and focuses on integrated POS systems.

The end of Leaf in its original incarnation makes sense, says Beth Robertson, principal at consultancy Robertson Payments Services LLC. Consolidating Leaf and its other POS system products “will build their market visibility and will be directed at unifying the products under a consistent development strategy and market approach,” Robertson tells Digital Transactions News in an email.

Similarly, analyst Christopher Shutler with William Blair & Co. LLC considers the consolidation wise. “We have been skeptical about Heartland’s ability to scale Leaf at a reasonable cost for a while, and we believe the strategy of acquiring scale in the cloud-based POS market makes sense at a high level,” Shutler wrote in a research note on Heartland’s fourth-quarter earnings.

Leaf’s change in plan doesn’t signal much beyond a shift in Heartland’s strategy, says Robertson. “There is still potential for other POS tablet brands to be incubated and also the possibility of continued acquisition to bring the integration of servicing, product development, and ancillary services under common brands at a lower price point,” she says.

What may be changing is that the focus is shifting to the software-development aspect of tablet POS, says Thad Peterson, senior analyst at Boston-based Aite Group. “The hardware side of tablet POS has condensed to generic tablets, be they iOS or Android, and the action is on the software side,” Peterson tells Digital Transactions News in an email. “And there are a lot of players in the space trying to serve a finite number of [small and mid-sized businesses], who have a variety of choices in addition to tablets, so if the market isn’t saturated, it’s darn busy.”

Heartland’s decision to end Leaf could be the start of a greater consolidation in tablet POS, Peterson says, though he cautions that more evidence of this will have to emerge to be sure.