Survey Says: A Service Mindset is Crucial

Specialty Coffee Retailer 

With Microsoft Corp. no longer supporting its Windows XP operating system, companies marketing tablet-based point-of-sale gear and software are hoping to garner more business from small and mid-sized businesses looking to replace POS systems that use the outmoded OS.

As expected, computing giant Microsoft ceased support for the 12-year-old XP on Tuesday, but merchants accounting for millions of points of sale are still running PCs equipped with the OS to handle functions from card transactions to loyalty programs to inventory management.

With Microsoft no longer supporting the software, users will no longer receive online updates, including so-called patches that fix security holes that could allow hackers to penetrate users’ systems. That makes XP more insecure, experts say, and also means users are no longer compliant with the Payment Card Industry data-security standard (PCI).

While exact numbers on how many merchants are using XP are hard to come by, the OS remains quite popular, especially with small and mid-size businesses. Some 73% of small merchants are running XP in some form, including for POS transactions or on servers, according to a recent survey by ControlScan Inc., an Alpharetta, Ga.-based security-services company. Ninety-two percent are aware that Microsoft ended support this week, but budget constraints and other considerations have kept many of them from switching out equipment, the survey says.

The new vulnerability of this existing gear also comes as merchants ranging from giant Target Corp. to smaller retailers are reporting data breaches that have exposed data on tens of millions of payment cards.

As more of these merchants begin looking to replace or shore up XP-based systems, a growing legion of tablet POS vendors hope to benefit. Many offer products based on the Apple Inc. iPad, which runs on Apple’s iOS operating system.

“We want people to switch,” says Jason Richelson, founder of New York City-based ShopKeep Inc. and himself a former merchant. “It’s a big deal. More than likely they’ll get a virus on their machine and won’t be able to rebuild the machine or re-install the software.” Six-year-old ShopKeep offers a cloud-based system that relies on the iPad and lets merchants run transactions, keep track of employee hours, manage inventory, and perform other business functions. ShopKeep accepts card transactions and also supports payment alternatives like PayPal and LevelUp.

“It’s going to take time, but yes, absolutely” the end of XP support will be a “catalyst” for tablet-based POS systems, Richelson tells Digital Transactions News.

In a recently released six-page white paper co-produced with ControlScan, Richelson advises merchants using XP that their choices are to upgrade to Windows 7 or 8, continue to use XP but switch to POS terminals for card transactions, or adopt a tablet linked to a cloud-based system. Tablets typically come from most vendors with card readers, receipt printers, and cash drawers.

The paper tells merchants they can easily tell whether their PCs are running XP by clicking on “Run” under the “Start” command in the task bar. They can then type “Winver” in the search box and click on “Enter” to bring up the version of Windows the machine is running.

ShopKeep just released version 2.0 of its system, featuring faster transaction times that Richelson says will make it easier for the product to penetrate new markets like full-service bars and restaurants. Most of the company’s current clients are small retailers and quick-service restaurants. The company will also release later this quarter a new product that will work with handheld devices like the iPod touch, Richeleson says, allowing retail personnel to serve customers anywhere in the store.

ShopKeep works with some 10,000 stores and is processing transactions amounting to $1.5 billion on an annual basis, Richelson says. The merchant count is up from 6,500 10 months ago.

Jason Richelson and his co-founder launched ShopKeep, a cloud-based point of sale company, from the back of their wine and grocery store back in 2008.

For the previous four years, Richelson had been using a traditional Windows-based point of sale system and was fed up with all the tech problems, including one particularly brutal experience where the servers crashed while he was on vacation, forcing his store to temporarily close.

He built ShopKeep to solve all the problems he faced with his old system. The company now offers small business owners a complete software and hardware product that gives them a wealth of data analytics as well as a way to track employees and scan credit cards with an iPad dongle, similar to what the mobile payments startup Square offers. Because all the software is cloud-based, users are safe from the potential havoc wrought by a single crashed server.

The company targets brick-and-mortar businesses of varying sizes whose owners are sick of using old, clunky systems that offer little to no customer service. ShopKeep not only lets users ring up sales, but track and manage their inventory, log customer information, and look for trends in sales data.

“ShopKeep helps you run a better business,” Richelson told Business Insider. “A lot of our customers try Square first. But, for them, it’s about collecting credit cards and doing payments. For us, it’s about what’s the next feature we can add to help our customers make more money.”

Richelson says that his company — which has currently has over 10,000 customers around the U.S. and has raised $12.2 million from investors like Tribeca Venture Partners and Canaan — helps small businesses in a more full-circle way than Square, the startup that Jack Dorsey founded that has more than $340 million in funding and multi-millions of users.

Going up against giants like Square and Groupon (which offers a point of sale app called Breadcrumb) with established names and big followings won’t be easy, but Richelson, who says that ShopKeep’s number of customers has tripled every year since launch, is in it for the long haul.