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Point-of-sale payments providers Toast and Clover are increasingly battling for restaurant customers, and that combat could become fiercer if a recession arrives.
Toast and Fiserv’s Clover are new entrants seeking a slice of a restaurant clientele that has principally been served by a pair of heavyweights, Oracle-owned Micros and NCR Voyix. But the fintechs are nipping at their heels with sizable shares, according to a report last month from Swiss bank UBS.
The report, which focused on Toast, predicts growth opportunities for the company. “The net new location additions over the medium term appear achievable,” said Tim Chiodo, the lead UBS analyst author of the March 20 report.
Boston-based Toast was launched in 2012 and offers several services, including point-of-sale payment processing. The company’s card readers have become widespread at U.S. restaurants in recent years.
Clover — which is owned by payment processor Fiserv — offers point-of-sale card readers mostly to small businesses. It was founded in 2010, making it and Toast relatively new entrants to the restaurant point-of-sale market, but both have gobbled up significant shares of that market in their relatively brief lifetimes.
Fiserv acquired Clover in 2019 when it bought the point of sale service’s parent company First Data Corporation for $22 billion. The Milwaukee payment processor has singled out Clover as a key driver of future growth, and recently launched the service in Australia and Brazil.
Point-of-sale services like Toast and Clover make money by charging restaurants upfront for card reader hardware and software services, and then collect a percentage of each transaction.
In addition to Clover and Toast, and the heavyweights Micros and NCR Voyix, smaller U.S. rivals noted by the UBS report include SpotOn and TouchBistro.
Of the 730,000 U.S. restaurant locations, Clover covers about 160,000, while Toast has about 130,000, the UBS report said.
Meanwhile, Redmond, Washington-based Micros and Atlanta-based NCR Voyix have about 190,000 and 107,000, respectively, according to the report.
Nonetheless, Toast has a larger 16% share of the $962 billion U.S. restaurant payments volume compared to Clover’s 8%, UBS said, citing data from IbisWorld. Micros processed the largest share, 30%, while NCR captured 16%, while Block’s Square also had 8%.
That left about 23% up for grabs, according to the UBS research, which “attempts to size the U.S. market and the number of locations that are reasonably available to be won in a given year,” Chiodo said.