In recent years, the convergence of software and payments has recorded the imagination of the world of fintech and saas (software as a service). And rightly – bundling payments with software platforms saves time, streamlines the activities and simplifies financial workflows for traders of all sizes. It is a win-win: sellers benefit from greater convenience and efficiency, while platforms unlock valuable new income flows.
But in the midst of all buzz around integrated payments, one piece of the puzzle remains considerably underexposed: hardware. Specifically, Point of Sale-terminals are treated as a after-idea instead of a strategic income flow still on a chance of € 1 billion+. We tend to become entangled in the E -commerce world, but in Europe more than 70% of the card volume is still face -to -Face and hardware is of vital importance in a whole series of verticals, from shops to transit, hospitality to construction. And for Saas companies it is an open door that remains largely untouched.
Let’s start with the numbers. There are approximately 23 million POS terminals throughout Europe. About 70% of this is used by large companies, which usually buy their terminals directly from manufacturers. But it is the small and medium -sized business segment (SMB) that retains the untouched value.
According to recent SMB survey data carried out by PSE Consulting, 45% of European traders – with peaks of more than 60% in markets such as the UK – already probably use or are most likely payment services via a software platform. These smaller traders usually rent their POS terminals for € 20-22 per month, and this figure can fluctuate based on the type of land and terminal.
Even with conservative assumptions, this translates into an annual hardware income pool of € 800 million to € 1 billion. Over the standard 3-4-year contract period, this will be a chance of € 2-3 billion or around € 700–800 per trader. And that does not take into account the circular potential of refurbished and recovered terminals, which can further strengthen the return.
The experience of PSE Consulting indicates that some payment service providers (PSPs) already see 20-30% of their SMB income from terminals. So the question is clear: if PSPs capture this margin, why don’t SaaS platforms do the same?
Pos -hardware can be extremely attractive from a business point of view. According to internal data from PSE Consulting, a typical terminal costs around € 250 to buy, while monthly lease rates yield gross margins up to 65%. Even after explaining financing, repairs, logistics and support, this remains a very profitable income flow – especially given that traders often have more than one terminal.
In the UK, for example, the average is 1.6 terminals per trader, which further stimulates the turnover potential.
In addition to the figures, there are also strategic benefits. In contrast to payment processing contracts – cordially regulated on the basis of PSD2 and often being recorded by traders with minimal notification – hardware contracts can hold customers for a maximum of five years. This offers a level of stability and predictability that is rarely seen in modern Saas.
Many Saas providers are already halfway there. If you send physical hardware, such as scanners, printers or cash drawers, adding a payment terminal is a relatively small extra step. And for platforms with concentrated regional customer bases, storage and logistics logistics are feasible and economically efficient.
The real power comes when Saas platforms go beyond traditional pos. Some of the most exciting growth areas include vertically custom -made hardware bundles. For example, Square offers a self-oriented kiosk for fast service restaurants for £ 35 per month, while Sumup offers all-in-one POS bundles-included screens, scanners and drawers-on-hevel £ 49 per month.
SoftPos – also known as tap to pay – is ready to further disturb this space. Instead of trusting a traditional terminal, SoftPos changes each NFC device into a payment terminal. For example, Sainsbury’s has launched a zebra device with SoftPos functionality, so that consumers can tap their cards on their self-scan “gun” everywhere in the store, no check-out row, no hassle.
This evolution means that Saas platforms are best positioned in the near future to offer flexible, software-guided hardware bundles that can simply not support traditional PSPs on a scale. The future of personal payments is not just about taking card transactions-it is about owning the entire device in the store.
For Saas platforms and their investors, the question is now how to act. Here are five steps to unlock this hidden billion-euro market:
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Segment your customer base. Understand which types of hardware different verticals require. The more the solution is tailored, the greater the value you can make – and load for.
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Explore Terminal Purchasing. Talk to PSPs, hardware manufacturers and local financing providers to understand your purchasing and financing options. Try to support both purchase and rental models.
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Understand the regulatory landscape. Make sure you are clear about security obligations (PCI DSS), leasing contract structures and all local rules for bundled services.
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Make bundled price packages. Develop flexible, transparent packages that combine the processing of hardware and payments. Make it easy for traders to buy, upgrade and scale.
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Train your sales teams. Make sure they can clearly articulate the value of bundled solutions – not only in cost savings, but in reliability, support and tailor -made hardware experiences.
In a world that is increasingly obsessed with digital transformation, it is easy to overlook the physical components that matter. But for millions of traders throughout Europe, hardware is not optional – it is essential.
For Saas companies, this means a great opportunity to diversify future income from payments and to help SaaS income retention -all while driving the continuous momentum of embedded payments.
Payment transactions may be digital, but the needs of the trader are still very physical. It is time for SaaS companies to stop ignoring the terminal and start building a real full-stack solution.
Tom Hay is a senior manager at PSE Consulting
“How European Saas platforms can unlock € 3 billion in hardware income” was originally made and published by Electronic Payments International, a Global Data brand.
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