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The Green Sheet Online Edition

October 08, 2007 • Issue 07:10:01

Wise up to wireless

By Paul Rasori

The shift to wireless payment systems has been dramatic. Just two years ago, wireless systems accounted for 10% of our new system shipment revenue; today it's 30%. Wireless opens up or expands entirely new market segments such as mobile retailers in open areas like malls, large stores or stadiums, home delivery and in-home services, restaurant pay at the table, and even taxis.

What may have been the last barrier to wireless was shredded. Sprint became the first wireless carrier to introduce a new service that essentially puts a cellular base station into a home and ties the cellular signal to the Internet.

The service allows its residential customers to use a broadband connection for any Sprint Nextel Corp. cell phone and ensures cellular reception inside a building. Other carriers are said to be developing similar products. This demonstrates that not only are there new opportunities with wireless, but technology is changing quickly with new ideas and innovations taking place all of the time.

Virtually unlimited use

The uses of wireless are practically unlimited, and an opportunity exists within almost every merchant business. New opportunities mean additional sources of revenue. Offering wireless options means opening doors to business growth, getting ahead of the competition, improving your customer service and being a leader.

Wireless essentially extends the POS. Merchants will no longer have to limit payments in certain situations to cash and checks, a deal breaker to customers who want to use only credit or debit cards.

It helps reduce fraud by having a customer's card information in fewer hands. And it improves customer satisfaction by speeding up service.

Using wireless data networks for electronic payments provides very tangible merchant benefits:

  • Proven, reliable, secure communications technology
  • Merchant flexibility
  • Faster transaction times
  • Lower terminal installation and operational costs

Wireless isn't just about portability, although that certainly is a major advantage. Portable requires a completely self-contained unit including power source, which can be used where mobility is essential such as delivery services. Fixed wireless systems are for countertop-like devices with ready access to a power source.

IP connectivity

Wireless phone companies offer advanced digital cellular technologies that deliver Internet Protocol (IP) connectivity and are well-suited for merchants.

Available in two formats - CDMA and GPRS - these options work similar to cell phone technology; you can access the Internet anywhere in the service area without having to plug into a jack.

Wi-Fi provides Ethernet local area network (LAN) capabilities without having to use cables. It uses standardized radio transmissions, which can be secured, to establish a wireless LAN. A merchant who has a DSL or cable modem connection can extend that single IP connection to multiple devices at little installation cost.

Another significant advantage of wireless POS is the ability to utilize IP-based POS transactions that use the industry-standard secure sockets layer (SSL) encryption, which enables secure transactions across public and private networks.

Encryption is a crucial element for wireless. MasterCard Worldwide has issued requirements for its new POS Terminal Security, or PTS, program that mandate encryption for all payment transactions transmitted via wireless POS and IP-enabled terminals. The goal is to protect security and privacy of information transmitted from a POS terminal to an acquirer's host system.

A wireless POS also can be thought of as a replacement for expensive and inflexible wireless telephone service. Installing a fixed line is costly and takes time. And when merchants reconfigure stores, they have to go through the process yet again.

An increasing number of merchants use wireless wide area network connections in everyday settings where dial-up terminals work just fine. Why?

Because the cost of wireless communications has dropped dramatically in the past several years to the point where some individuals have cast off their land lines in favor of wireless-only voice services that bundle long distance, local, voice mail and three-way calling.

Major carriers have developed billing options for data network services based on the amount of data transmitted on a monthly basis, rather than minutes connected.A typical POS terminal transmits such a small amount of data that wireless carriers have set up special pricing plans that reflect this usage model, which in some cases can be 50% to 70% lower than the cost of the average business phone line.

Wireless POS terminals share the same basic economic justification that drives consumer migration: lower cost and better service. Wireless services are typically "always on." In addition to being substantially cheaper, they also perform better. With that type of incentive, converting more merchants to wireless should be a high priority.

##end_tag Paul Rasori is VeriFone Vice President of Global Product Marketing. He can be contacted at paul_rasori@verifone.com. ##end_t end of article

Paul Rasori is VeriFone Vice President of Global Product Marketing. He can be contacted at paul_rasori@verifone.com.

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