Parts of the point-of-sale hardware market are seeing price cuts amid a growth push and new upgrade demands from merchants.

Toast, Square and other point-of-sale hardware providers have resorted to sharp discounting in recent months, analysts say.

Toast and Block-owned Square have led the price-cutting push, sparked by efforts to expand their locations, merchants’ upgrade needs and more expensive equipment, Robert W. Baird analysts said in a client note following their conversations last month at the Western States Acquirers Association conference in California.

Toast has taken a “proactive” approach to driving equipment into its core business of restaurants, and has used the lure of free hardware coupled with software discounts to do so, said Jacob Haggarty, an equity research associate with Baird Equity Research.

“For Toast, if you get someone on the platform through a discounted hardware, now you’ve got them ingrained in your software,” Haggarty said in a Sept. 28 interview.

Baird analysts called out the discounting in a Sept. 20 client note following their discussions at the three-day acquirers’ event with more than 20 merchant acquirers, independent sales organizations, software vendors and POS providers.

Toast and Square generally rely on direct sales, while Global Payments and Fiserv sell their Genius and Clover POS systems, respectively, primarily through ISOs, Haggarty said. The competitive POS field also includes players such as Shift4 Payments, NCR Voyix and Lightspeed Commerce.

“It’s a very chaotic industry, especially the pricing,” said Cliff Gray, a Chicago-based payments consultant.

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