The Point of Sale (aptly referred to as the PoS) has traditionally been the anchor of brick & mortar businesses in general but even more so for restaurants. In restaurants the PoS is the main communication channel between the servers, the kitchen and the bar. Every item ordered goes into the system and the PoS has to spit out the right ticket at the right station at the right time so the kitchen and bar know what to make and when. If the PoS goes down or acts wonky, all hell breaks loose.

That's why for many years the PoS acted as the anchor for the business. Opening a new restaurant meant first choosing what the PoS would be (probably Micros) and laying down the network and printers around that. It was such a core decision that almost no one switched systems once they were setup - it was such an expensive decision that would need to have serious benefits to consider. In fact most restaurants still won't even consider switchin - my favorite quote from an Agnoris customer when asked why he wouldn't move to a modern system: "I'd rather have needles jammed in my eye".

See PoS were traditionally big computer setups that handle the money. They were expensive and complicated and abhorently hard to use. But a few years ago something big changed - the iPad. Forward thinking companies realized that iPad and cloud were so much better suited for doing the PoS job (hey - working for Amazon so why not the corner coffee shop?). And companies like Square, Toast and Salido (to name just a few) were born.

The barrier for developing a PoS became so low that more and more competitors jumped in the game. Today there are over 100 different PoS options in the US market just for restaurants! And naturally the differences between them are getting less and less clear. All of them try to do more parts of the restaurant business but over time they look more and more alike.

So where is all this going?

Traditionally in fragmented markets eventually 2 or 3 players end up buying their way to owning the vast majority of the market (either through buying competitiors or outspending them until they shut down). We're seeing some of this today with Toast raising crazy amounts of money and Square creating a restaurant specific play on their solid foundations.

But there's another force at play - credit card processors.

See PoS is first and foremost a payment terminal. But processing credit cards (which from what we see is well over 75% of transactions) is a complicated task the PoS companies handoff to one of dozens of companies. They allow restaurants to negotiate with different credit card processors for better rates. Then credit card processors realized they could own the terminals themselves. Why not? It's a stronger hold on the customer since changing these systems is so difficult and you get more granular perspective on the data. So credit card processors started buying up PoS companies en masse.

So here's what I see happening in the next 5-10 years.

I'm betting PoS are going to become generic. And that some bright people are going to write nice code that lets you move from any PoS app to theirs automatically importing everything. To the restaurant it'll basically be like switching from Safari to Chrome. In that market, it becomes a pricing war. That's where credit card processors excel. With their data they'll know how much to offer every new customer on processing fees and nab new customers. Save 0.25% on processing fees for just installing a new app that does all the same? Finally sounds better than needles in the eyes.

What do you think? We'd love to hear your thought at hi@agnoris.com