The Green Sheet Online Edition
May 12, 2008 • Issue 08:05:01
Welcome to the wireless mainstream
While the payments industry fortune tellers gaze into their crystal balls and try to predict the "next great thing," let me discuss the substantial growth that has occurred within an existing POS segment: wireless credit and debit card processing.
Wireless sales have been viewed as a niche market. Processors felt they were covered if they had one Class A wireless device. Equipment manufacturers dedicated fewer resources to wireless POS devices than to their higher volume items such as dial POS terminals. Merchant level salespeople (MLSs) treated wireless as an ancillary arm to their sales portfolios, and merchants were resistant to buying wireless for a number of reasons.
All that has changed. Today, it is not uncommon for a processor or merchant bank to have two or more Class A wireless products, for example, a larger, desktop wireless and a mobile or handheld wireless.
Most POS manufacturers are committing significant resources to wireless development. MLSs are beginning to see wireless as a profitable and effective way to close and keep merchants in their sales portfolios, and merchants are moving from wanting a wireless device to needing one or more wireless devices for day-to-day business.
Many factors are driving the evolution of wireless to the mainstream, not the least of which is the continued rise in discount rates for merchants who conduct keyed entry transactions.
Another significant improvement in the wireless sphere is the continued shrinking of the three C's (cost, coverage and convenience) roadblock merchants have faced. Cost of wireless equipment has entered a phase of true market competition where there are now significant differences in price from one model to another.
Coverage has never been better and continues to improve. The convenience of ordering, provisioning and activating a wireless unit has improved, as well; it can be a one-stop process. The wireless market is not shrinking or static. In fact, it includes more of what are typically thought of as dial merchants than ever before. It is no wonder that sales growth for the wireless equipment manufacturers continues apace year after year.
As an ISO or MLS, are you really looking at the tremendous growth and profit wireless sales offers you and your company? Inherent in wireless is recurring revenue (monthly wireless fees), higher than dial equipment profits and the ability to sell more than one device in a single merchant environment.
This is key: Traditional dial merchants are buying wireless products for their field delivery, repair and sales personnel. This allows you to sell many terminals to one merchant, activate them, generate recurring revenue and, best of all, very likely keep your merchants for the long-term because, through wireless POS implementation, you will have made them highly resistant to switching merchant accounts from you to your competition.
Markets ripe for wireless
Following is a list of traditional land line merchants who are candidates not only for wireless, but also for multiple wireless devices. Think about how many of these merchant categories you or your sales force are calling on. And how many do you already have in your sales portfolio where you can harvest them for updating and adding wireless equipment - thereby protecting yourself from competitors offering wireless services?
- Contractors: General; gardening and landscaping; electrical; masonry, tile and plastering; carpentry; roofing and siding, and special trades
- Installation, repair and maintenance services: Heating and air conditioning, computer and computer peripherals, fireplace, swimming pool, carpet and upholstery, cleaning, pest extermination, and general upkeep Transportation services: Taxi, limousine, airport shuttle, local delivery and courier
- Pay on delivery arrangements: Furniture, appliance, floor covering, drapery, window treatments and so forth
- Restaurants: Pay at the table and food delivery (pizza)
When talking to merchants about converting them from traditional phone services, remember that you must do an effective discount rate comparison and show the benefits of moving to a wireless format.
If merchants have sales teams or delivery people calling in transactions, remind them that face to face transactions allow them to:
- Lower the discount rate
- Accept PIN-based debit transactions
- Increase cardholder satisfaction because cardholders always maintain possession of their cards
- Reduce the propensity toward cardholder chargeback demands
- Reduce the need to accept checks without a guarantee program
- Virtually eliminate the need to accept cash
The wireless transaction model for credit and debit card sales is high-profit and recurring. It should be at the top of your growth charts this year and beyond. And you don't need a crystal ball to see that.
Tim McWeeney is Vice President, North American Sales for WAY Systems Inc. WAY is a leading provider of cost-effective, mobile wireless transactions.
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