Dive Brief:

• Shopify last week unveiled a new suite of three devices, the "Shopify Tap & Chip Reader, Dock, and Retail Stand."

• The Tap & Chip Reader allows for contactless tapping payments, or inserting a debit or credit card. The reader also works with Shopify POS, the company's software that allows for cross-channel inventory management, secure payments and "a consolidated backend" that connects with online operations, according to a company press release.

• The collection also includes two new accessories — a sleek dock for charging the reader and a stand that powers and connects the Shopify tablet. The tablet can be positioned on a counter like a traditional checkout or detached so employees can use the tablet for customer service on the store floor.

Dive Insight:

Shopify's new hardware is a "smart move" because traditional POS systems aren't usually so well connected for on and offline sales, according to Adam Corey, chief marketing officer of customer data platform Tealium.

"Systems like Shopify has introduced are the key to connecting both channels and building seamless experiences as online-first brands expand their in-store presence," he said in comments emailed Retail Dive.

But Shopify's isn't just competing with traditional POS systems. "Small business payment facilitation is a crowded, but still under-penetrated market – the vast majority of small businesses still have the heavy, wireline terminals and separate in-store vs. online payments," MoffettNathanson senior research analyst Lisa Ellis told Retail Dive in an email. "Also, so far we have seen limited differentiation among players – e.g., Square's systems vs. Clover vs. Toast vs. Shopify's systems vs. Stripe's system vs. niche players like Breadcrumbs … they all pretty much look alike & have similar capabilities."

Shopify's new hardware set is another example of an online payments player extending into the store, she also said. "PayPal made a major investment in that direction [with] their acquisition of iZettle, and Stripe has also moved in that direction," she said.

Rival Square just last month announced revamps of its Square Online Store and Square for Retail, products that allow merchants to add e-commerce to their sales operations, including tools like Instagram selling, shipping and in-store pickup. That development came out of last year's acquisition of Weebly and has helped Square catch up from behind in e-commerce.

"The general theme is that merchants – even small merchants – are rapidly & increasingly demanding omni-channel payments offerings," Ellis noted. "Historically, merchants have often used a different merchant acquirer for their online and offline payments, because the nature of the payment is very different (e.g., in-store, you have to wire up and maintain POS systems; online the fraud risk is greater and it is more of a software function)."   

But as demand for in-store pickup of online orders has risen, "merchants now want omnichannel," according to Ellis. "So, we're seeing payments players that have historically focused either in online (PayPal, Stripe, Shopify) shift into the store, while players that have traditionally focused in store (Square) are trying to add eCommerce capability (hence, Square's acquisition of Weebly and recent eComm product announcements)."

While Shopify has offered in-store POS gear for a while, the new tools help it catch up in brick and mortar, bringing the battle to Square coming from the opposite direction. Several "micro decisions" went into the design of Shopify's newest iteration of its store hardware, based on work with merchants, Shopify Retail's Director of Product Arpan Podduturi told Retail Dive in an interview.

"Merchants have very intentional aesthetics in their spaces," he said by way of example. That led to the devices' dark color and rounded edges, which also make it easier to handle them and take them in and out of their docks, he said. And the ability to use the tablet on the floor store takes advantage of many merchants' investment in striking product photography, which can be used for inspiration, loading up a cart to buy later or sales of items beyond what's in the store, he said.

"What the hardware represents is really a deeper investment in unified commerce. They have that one set of customer information that one set of inventory information — and that's a really powerful aspect," Podduturi​ said. The way we look at it is we've been a commerce platform for a really long time — I think most people think of Shopify as 'e-commerce' and we really look at it as 'commerce.'"