How merchants get ripped off with their technology choices

Top ways merchants get punked on tech
November 12, 2019 Adam Stead
~ read | In Thoughts, Compare EPOS
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EPOS technology should be easy to choose and to buy. But it’s not. Instead, it’s complex, and there are also some bad actors looking to deceive merchants into paying more. 

Fortunately, the ways in which merchants are regularly ripped off are repeated “traps” that it’s possible to recognise. Here’s our list of the top ways in which we see merchants losing out when they come to choosing store technology. If you’re buying EPOS, or if your parents are, it’s worth taking a look at this list to ensure you’re not about to get punked.

1) Forced Payment Partners

An EPOS system is comprised of hardware, software, and payment processing. In older systems, all three tended to come together – you would buy a till + software from a company that made both and you’d be put onto their payment rates with their preferred provider. With newer systems, you buy your software first, then payments, then hardware. (Or, you can choose everything through StoreKit – we’re a software and payments marketplace.) 

StoreKit journey 2005 / 2019

NCR is a company which sells all three together – but we don’t want to imply that they’re ripping people off. Just that the second model – shown as the “2019” model here – is a better way of getting the right price for all three elements.


Payment processing is an arrangement with a bank, even if it’s branded as an arrangement with a till company. A payment processor will sell or rent you a card reader, and charge you somewhere between 0.6%-2% of all the payments taken with them. Your payment fees depends on two things: your card turnover, and what they think they can get past you. 

Companies that sell tills + software generally get a cut of payment referrals to the banks. Knowing that merchants often pay less attention to payment processing fees, banks with software-branded payments will often put up their payment processing prices to subsidise competitive till pricing. A good litmus test is whether they will enable merchants to choose alternative integrated payments, or whether they force you to use theirs.

The top way people get ripped off is when companies that sell tills on the basis of reasonable till and software costs hide the associated payment rates in the smallprint. 

cheap till with expensive payment procesing

Usually, the payment processing is where the bodies are buried – because they’re the most complex, and therefore likely to put you to sleep fastest. if you’re going for proprietary software and hardware, think about what payment processing they provide – and get out the calculator.


2) Selective Rate Quoting on Payments 

different payment processing rates

We said payments rates are complex – let’s get specific. It’s possible to get flat inclusive percent rates nowadays (recommended for some merchants – understand when) but most payment rates are different depending on the different cards which get used: 

  • By brand of card network (mastercard, VISA, AmEx, China UnionPay…)
  • By credit or debit
  • By level of reward
  • By business / personal card
  • By UK / EU / International

In addition to that, there are a series of fees which may or may not get quoted, which include:

  • Interchange fee
  • Card network fee
  • PCI compliance fee
  • Data security fees 
  • Other compliance fees
  • Administrative fees

So an international business mastercard is a different fee from a platinum UK VISA.

Now, this isn’t to say that the simpler rates are necessarily better than the more complicated ones. 

There’s three formats in which you can have your payments rate: flat, interchange ++, or blended

Flat rates are the same for everything, where the processor absorbs the differences in their costs. Interchange ++ is the opposite, where a processor will break down their costs, all the different fees they pay, and itemise everything – it’s possible to get the best rates this way, but the quotes are devilishly complex. 

Blended is the way that most providers cite their card rates. It’s a simplified version of interchange ++ – but the issue here is that providers might “simplify” the expensive parts out of the rate. Always read your contract very thoroughly before signing – because the full rates might be in the contract, but not the quote. 

See an example of a deceptive quote versus the contract that got sent through.

3) Failure to run a bidding process

payment processing bidding


Payment processing is what’s called a commodity, which means it’s the same product at different prices. That also means it’s all negotiable. 

In our experience, merchants generally get that they have to shop around – but don’t negotiate as hard as they could. Specifically, they’ll ask for a load of quotes, look at the quotes, and choose the one they think is cheapest.

That’s a good first step – but think of a bidding war at an auction. If you call provider 2 and tell them provider 1 is cheaper, they might lower their rate again. Repeat until you have a rate you can work with.


4) The “upgrade” racket


We mostly sell “software-as-a-service” which is also “cloud EPOS software” – and this is one of the big arguments for both of those. If you’re considering software which is bought outright, watch out! 

Unfortunately, a well-known practice for driving sales in technology is to make the older things break. Phones degrade; software stops; and tills get old too. 

If you buy software which you own, it tends to get sold in versions – 1, 1.1, 1.2, and so on. This means that you’re probably a couple of versions behind the most up-to-date.

Software companies allocate all their developers to working on the most recent version. This is mostly legitimate – they’re building the newest and best – but it’s worth bearing in mind that if they can get you to pay-to-upgrade, they make more money.

Here’s the journey: first, you buy 1.1. When it’s the most recent version and it works great. After 1.2 comes out, you begin to find 1.1 doesn’t have the newest integrations or plugins. Then, 1.1 begins to not work quite as well as you remembered. Finally, 1.1 becomes a serious cyber security risk as a vulnerability has been found and the “patch” is only available for the later versions. If you have to pay to upgrade, remember, they have no incentive to keep the old version working when you could upgrade to the new one! 

When you bought the software, the hope was that you’d own it. But they are still exercising power over you. (Book a call to find out more.) 

5) Closed Software / Integration fees 



integrations which cost

Integrations are where two softwares talk to each other. If it were an integration between your EPOS software and your payment processing, it would mean that the correct price would cue on the card reader automatically, each time you ring something through your till. 

Or, it might be an integration with your accounting software – which will pay attention to what you’ve sold and always have the correct figures. And so forth. For bigger companies, e-commerce, inventory, and staff management, scheduling, and any manner of other software products, can all integrate with your EPOS.

Unfortunately, integrations cost money to build, and so it’s absolutely fair that many integrations are billed as discrete fees in addition to the EPOS software. But this is where we like to draw a distinction between “closed” and “open” EPOS software. If you choose “open” software, anyone could build an integration. That means if you buy a till with an open software company like Vend, and Vend ask you to pay a fee for an integration with another software brand, there’s a cap on what they’re likely to charge – because they know that you could shop elsewhere. In closed softwares, only the software company in question can build the integration – so the costs can be exorbitant. (“Only our guy can do that – and it’ll cost you…”) 

But it runs deeper than that. This is a big philosophical difference in the ways technology companies operate; and in our experience, software companies either see integrations as a key business asset to help attract customers – or a cash cow to make money out of existing customers. Our favourite softwares proactively build integrations, many of which they provide for free, because they know it’s a key way they can make their product valuable to new and existing customers.

In our experience, lots of customers think of integrations as something which is “custom” and takes a while to build – but there’s generally a bunch of integrations which are ready at the touch of a button.

6) Proprietary Hardware

A similar things happen with proprietary hardware – especially when you need something fixed. We prefer generic hardware because it means you have lower sunk costs if you decide you want to change software. If you choose a downloadable app for your EPOS software, you’ll probably only need to replace your printer for £100 or so if you decide you want to change software – rather than a whole till for £1000 or so. This means that it’s easier to leave.

The moment in which proprietary hardware companies have the most leverage over you is when things go wrong.

“You’ll need our guy to come out and fix that – which will cost a lot of money…”


The irony of it all

There’s an irony to all of these: it’s that in our experience, the most price-sensitive customers on the market are the most vulnerable to being ripped off. 

If somebody wants to buy software which they can own, it’s usually about control – and feeling in control. 

If someone doesn’t want to show payments quotes to other processors, they don’t want to cite their other rates or their current card processing data because they (rightly) don’t trust payment processors. 

If somebody wants to buy everything at once, it’s because they believe this may be cheaper than buying each element separately. 

These are ways to avoid being ripped off, but they all have the opposite effect. Whether you want software as a service or you prefer to buy outright, give StoreKit a call and we’re happy to talk you through the market. Or, if you have a parent or relative buying EPOS for their store and you’re concerned they might be being ripped off – talk to us and we can give you our best advice.


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Top ways merchants get punked on tech
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