Financing Options

Financing Industry Options

The way we sell solutions today has changed drastically, especially in the POS space. Today they are so many different models than there were ten years ago. POS is being sold traditionally, Solutions as a Service, Hardware as a service, FREE hardware, etc.. While feature and functionality drives decisions in tier 1 and tier 2, it is the financing and ease of entry that is driving it at the SMB level.

To continue to thrive at the SMB level many partners are utilizing 3rd parties to facilitate financing options. Leasing has always been a viable option while most recently the subscription (rental) model has gained some ground. BlueStar being at the forefront on this type of financing. Now we are beginning to see the introduction of “shared Risk” models where everyone in the solution is taking some risk and being paid over time. Obviously not the traditional buy at X, mark it up Y and sell at Z, but it has the ability to drive increased margins and lock in valuable recurring revenue with services.

More and more of our partners are converting to “as a service” offerings. This is driven by many different factors, but in large by two; ISV’s and business stability. The successful software companies today have fully converted to a SaaS selling model. Very few software partners only offer a license based approach. While hardware margins continue to drop, dealers have had to focus on services to drive revenue. Today most successful POS resellers are driving growth and stability from recurring revenue on services offerings.

Traditional Sale

Current standard practice for resellers. Sale to include but not limited to hardware, software, services, and installation.


Involves a third party financial entity that funds the deal upfront and charges the end user a monthly payment based on approved credit. The terms are typically anywhere between 12 to 60 months and in most cases require no money down. The reseller gets paid upfront for everything that would typically be in a standard sale. One of the key points is that the financial entity does not pay anyone until the end user signs a “letter of completion” which states that the reseller delivered all that was agreed upon.

There are two main types of leases; FMV (Fair Market Value) and $1 Dollar buyout. This determines what happens at the end of the term of the lease. In the first scenario the end user, if they choose to keep the equipment, would pay whatever the fair market value is determined for it. The payments on this type of lease are typically lower as the cost of ownership at the end of their term is higher. In the second scenario the end user would pay only $1 dollar if they choose to keep the equipment and payments during the term are typically higher.

In all leasing opportunities it is up to the reseller to go in and resell their service contracts at the end of the term, if the end user chooses to keep the equipment. This is crucial as the hardware will most likely be outside of the standard manufacturer warranty.

Hybrid SaaS (subscription)

Our Hybrid SaaS model puts a spin on the traditional lease, it actually looks more like a rental program. Just like a lease, terms run 12 to 60 months and everyone gets paid up front. It is meant to be a no money down scenario based on approved credit. The major difference is that there is a change at the end of the term. The concept is at the end of the term the reseller would work with the end user to update and replace all hardware, software, services etc. For the reseller this is a great opportunity to continue to lock in their customers to service contracts. In a Hybrid SaaS scenario it is crucial to pair up the term of the agreement to the all warranties involved. At the end of every term old product is picked up and destroyed while new product is installed under warranty and the merchant never needs to worry about service or broken equipment.

Shared Risk Lease

This type of lease is fairly new to the channel and has several variables involved. Like a typical lease the end user makes a monthly payment to a financial entity that manages the collection and disperse all of funds to the parties involved. In this scenario all parties (reseller, ISV, distributor and manufacturer) determine how much they will get paid up front and take the rest over the period of the term of the agreement. All parties share a certain amount of risk! However, all parties set how much margin they make. In many of the deals that are out in the channel today, a majority are seeing significant increases in margin. At the end of the term the reseller owns the solution and can choose the next path for his customer.


Software as a Service primarily involves software and our ISV partners with no hardware attached. They do not sell their software as a license but as a cloud based subscription. This allows the ISV to drive down the cost of entry into a POS solution and even scale with the end user while they grow without significant allocation of dollars. The merchant can add on or subtract modules of the software at any given time without downtime or installation costs. ISV’s typically withdraw dollars out of the merchant account at the beginning of the month for that months services. If the merchant does not pay or does not have funds the software is shut off until payment is received.


With the increase is SaaS modules today many companies have developed HaaS (Hardware as a Service) programs. These types of programs typically look like a lease or a rental, but covers the hardware only. This is a good fit for someone that is currently using software that is a cloud based SaaS model and does not want to invest a lot of capital in hardware.

Jason R. Firment

Director of Point of Sale
Phone: 800-354-9776 ext. 4230