The Green Sheet Online Edition

June 07, 2007 • Issue 07:06:01

Debunking wireless myths

By Bulent Ozayaz
VeriFone

Myths endure, even when refuted by airtight logic. To some extent, that's the situation we face today with regard to wireless POS systems, which have great potential to modernize POS transactions. Persistent fears about wireless monsters of old are holding back the march of progress.

I'd like to dispel the myths circulating about wireless POS technology. Why should you care? Primarily because grasping the true advantages of wireless POS systems will boost your profit potential and increase your value to customers.

All myths have some basis in a distant reality. And in the past, there were very significant drawbacks to wireless payments. But times have changed. So let's take a look at the myths and realities of wireless as they apply to payment processing today.

Myth No. 1: Coverage isn't good

Historical basis: Nonstandard wireless networks, such as cellular digital packet data (CDPD), Motient and Mobitex, were notorious underperformers. Coverage was far from ubiquitous; service could be erratic; customers were often unhappy.

Today's reality: How many of you go anywhere without your cell phone these days? You're virtually assured of service unless you're out in the hinterlands.

The old networks are either dead or on life support. They are being replaced by better technology that major communication networks are backing with multibillion-dollar investments.

Not only is coverage better, but general packet radio service (GPRS) and code division multiple access (CDMA) technologies are more efficient and have the ability to transmit data more securely.

These networks - backed up by industry powerhouses Verizon Wireless, AT&T (formerly Cingular Wireless) and Sprint Nextel Corp.“: are here to stay. They are built on the backbone of the cell phone infrastructure that supports hundreds of millions of consumers.

In 2006, out of 233 million cellular customers in the United States, 86.8% were covered by global system for mobile communication (GSM) and CDMA technologies, according to industry groups.

Myth No. 2: It takes longer to set up a wireless merchant account than a countertop account

Historical basis: Older wireless networks were cumbersome and time-consuming.

Today's reality: We're now in the era of plug and play. Compare the experience of signing up for a wireless phone versus setting up new landline service today.

With wireless, if the equipment is on-hand with your processor or preferred reseller, you can establish service in almost real time. With landline, it will likely take weeks. And if you need wiring installation, it may cost hundreds of dollars (if you can find somebody to do it).

Wireless networks and support organizations are creating an infrastructure much like what the cell phone industry has created to provide mass service. The major service providers such as AT&T and Verizon have tailored programs specifically for POS transactions that make wireless accounts less expensive than landline accounts.

Myth No. 3: There isn't enough support for wireless POS

Historical basis: Sure, when wireless networks were sparse and the number of systems in circulation was relatively small, support was very limited.

Today's reality: All major processors today are set up for wireless transactions, and Class A and help desk support options are available.

Today's third-generation networks and hardware are more advanced; a wireless POS terminal works virtually anywhere a cell phone works. Installation is simple and service is reliable.

Myth No. 4: Merchants are doing fine without wireless, so why change?

Historical basis: When something is not readily available, it's easy to think you don't need it. Case in point is the cell phone: When the only options were spotty analog service and 10-pound units, very few people thought they'd ever need a wireless phone.

Today's reality: Merchants need wireless to expand their businesses with card acceptance for delivery services, in-home services, curbside food pickup, sidewalk sales, and so forth.

Let's face it, consumers are hooked on plastic. Having to come up with cash can result in a lost sale. Add to that the cost of handling cash (pilferage, bank fees, security, for example), and card acceptance looks better and better these days, regardless of interchange costs.

In addition, once merchants have their hands on wireless systems, they will realize that flexibility and portability generate additional revenue from increased sales. They will be more likely to purchase additional systems.

Myth No. 5: Wireless is expensive

Historical basis: Many of you undoubtedly recall a few shocking moments when monthly wireless phone bills came with pages of roaming call charges.

Today's reality: Wireless service providers long ago realized they could sell more plans by reducing the shock factor. Plus, competition has pushed costs down to levels that are more attractive than landline costs.

In addition, service providers have crafted packages specifically for card transaction use. Savvy ISOs and merchant level salespeople are finding they can generate incremental revenues by reselling service packages.

Wireless data packages are billed on data volume rather than minutes used. Base wireless packages can start as low as $20 per month. Meanwhile, businesses can do away with phone lines and eliminate dependency on phone jack location.

Myth No. 6: Wireless is slow

Historical basis: The earlier generation wireless data networks had theoretical data transmission rates of up to 19.2 kilobits per second, but actual transmission was generally quite lower. Round-trip transmission lag could be four to 30 seconds.

Today's reality: GPRS and CDMA offer much more robust capabilities and better coverage. This means transmission times from start to finish are generally no more than two to three seconds, and often faster.

Myth No. 7: Wireless isn't secure

Historical basis: Many of us remember the days when the hot security issue was not credit card fraud, but rather cloned cell phone numbers. Back in the days of analog, circuit-switched wireless, security was indeed an issue.

Today's reality: Today's CDMA and GPRS wireless networks provide a high degree of security with advanced digital encryption technologies. In VeriFone's case, secure sockets layer (SSL) encryption is provided.

You cannot scan wireless information from the airwaves and use it for fraud. The level of encryption is so great that fraudsters wouldn't even consider attempting to create a breach. There are many easier targets for them to pursue.

Myth No. 8: Wireless equipment isn't sturdy

Historical basis: Early wireless terminals were not designed to withstand impact and spillage. As a result, they were not suited for market segments in which physical reliability is a major concern.

Today's reality: New wireless terminals are built for rugged conditions. Wireless payment technology is very much a maturing art form. Today's systems represent lessons learned from years of field experience.

Moving forward

Skeptics like to point out that in the United States, the overall wireless adoption rate has been slower than in Europe and Asia. But don't forget that for many years the United States enjoyed not only the most advanced landline infrastructure, but also the lowest costs. The incentive to go wireless in Europe, Asia and Latin America was much greater due to the cost advantages that wireless technology offered.

It has taken time for wireless in the United States to match and then surpass the advantages of our landline system.

While there are regions throughout the country that don't have wireless service, they are mainly unpopulated or barely populated areas where you're not likely to be selling anyway.

In fact, 99% of Americans are now living in counties in which next-generation wireless services are available, according to CTIA –: The Wireless Association. It reported there are now more than 233 million wireless subscribers in the United States.

The art of any deal lies in selling the customer on the benefits. With wireless there are many. But there are also benefits for you. Adding a wireless terminal to every deal will provide you with greater profits and up-selling potential.

Bulent Ozayaz is VeriFone Vice President of Marketing for North America. He can be reached at bulent_ozayaz@verifone.com

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