ith a desire to get ahead of the magnetic stripe curve, four engineers with a combined 35 years of experience and expertise joined forces to meet the needs of a changing payment-processing environment.

Their goal: Build a commodity product for the emerging handheld market, deliver it on time, make it reliable, make it affordable and all the while make sure to take care of the customers. It would give them an edge. And it has.

Since its inception in 1998, San Diego-based Semtek Innovative Solutions Corp. has focused on one special market: anyone who needs to swipe a card on the run. That market includes stadiums, swap meets, taxis, tableside at restaurants, hotel door locks, limos, kiosks, even boarding-pass readers at airports.

In 1999, Semtek introduced magnetic card readers designed to work with all standard digital interfaces and protocols. Whether in single reader or hybrid magnetic card and smart card configurations, Semtek offered its solutions through resellers to merchants who wanted to take advantage of the growing wireless transaction market. Today, Semtek boasts that thousands of merchants have embraced its technology.

"We are the experts," says John Sarkisian, CEO of Semtek. "We have patented technology for detecting fraudulent cards and have developed wireless solutions that involved magnetic stripe card readers. Another feature that makes our device so competitive is our power-management feature."

Semtek's product flexibility, customization and cost also seem to appeal to merchants. "The customization comes into play in how merchants are doing their processing and what units they're using," says Sarkisian. "Some use Java, others use WAP. We customize it all. As for the cost, the processing fees are less than if you were not to do it at all. If merchants can't process that card in certain situations, they've lost the sale." For the ISO arena, Semtek sees its biggest attraction in its support of that special sales channel. Between 40 and 50 national independent sales organizations are reaping Semtek benefits.

"We support the ISO," says Sarkisian. "The difficulty facing ISOs is that they look for a total solution with a unit, software, airtime and a gateway. So we put together alliances with providers that enable control of the whole process. And we bring this whole package to the ISO."

Those alliances include Casio, Compaq, Kyocera, Motorola, Palm and Symbol. "We look for someone to commit both ways, both for the customer and supplier," says Sarkisian. "We are constantly looking for partnerships since this market is emerging and as form factors change and people look to incorporate all these solutions into one device, we want to be there with those people as their partner. Take Casio. We're teamed up with them in an exclusive partnership for three years. We were their first choice to build their reader."

Casio is not the only company that opted for Semtek solutions. AIRCHARGE exclusively uses Semtek card readers for its solutions. Based in Chicago, AIRCHARGE packages and sells wireless solutions for such devices as Nextel, Sprint, Verizon, Kyocera and Palm Pilot.

For the past year and a half, it has partnered with Semtek, buying in quantity at a set buy rate. Semtek is a hardware vendor for AIRCHARGE that resells its products to food delivery, heating, air conditioning, plumbing and taxi/limo service providers.

"Their products are high quality and meet the needs of our customers," says Bob Wallace, President of AIRCHARGE. "We don't see return units when utilizing their equipment. They keep enough equipment in stock to handle all our needs. They have been very easy to work with."

Another partner praising Semtek is North American Wireless Solutions, out of Yonkers, N.Y. A Nextel wholesale business partner for the Tri-State area, North American Wireless relies on Semtek products for its resale success.

"Semtek is very entrepreneurial and very easy to work with," says Gino Ambrosio, President of North American Wireless. "While they offer the best pricing, that's not the defining factor. They offer the best service, the best quality product. It has been fantastic doing business with them. If all my vendors were like them, we'd be doing that much more business."

Ambrosio continues, "I need a company like Semtek to make the wireless credit card component for our customers. As wholesalers, we sell to the retailer. We can take their wireless credit card machine and allow them to do something they've never done before. It's fast. It's a fraction of the cost. It helps upsell our product and solidifies our relationship with our customers.

"We are always looking for different avenues to reinforce our customer relationships. Semtek does it for us. They have been great. I'll never forget John's words when we first met. He said, 'I want to take the Nordstrom approach - if anything goes wrong, we'll take it back.' That has made our life easier and has given us an entire package."

As a technological partner, SecurePay also has found satisfaction with Semtek. Headquartered in Braintree, Mass., SecurePay is a gateway and wireless solutions provider that recognized the innovation of Semtek and has been a partner since early 2000.

"They were one of the first to come to market with a solution we were looking for," says Jody Latimer, National Sales Manager for SecurePay. "As a gateway platform, we needed it for our wireless division to offer solutions through Palm products. We were one of the first to create apps for Palm devices.

"Semtek was one of the first to create the swipe. It's been excellent working with them. They are very responsive. They are very respectful. There are no issues with them. They always want to know what's coming. Old news is old news. As new products come along, they are creating swipes for them. They are ahead of the game."

While Sarkisian acknowledges that making the right alliance choice is an ongoing challenge for Semtek, the bigger challenge lies in meeting market demand.

"As the market matures, certain providers will get the bulk of the business," says Sarkisian. "Our challenge is to increase the functionality of our products by migrating to effectively and efficiently read smart cards, checks, bar codes, and even incorporating a printer feature."

One controversial market demand is smart card technology. Where does Semtek weigh in on the debate?

"We have to be prepared for it, but we're not expecting magnetic stripe to go away anytime soon," says Sarkisian. "Not a lot will be done until the government comes out with standards and/or regulations. And if the big boys like Visa and MasterCard go with smart cards, then we all will have to do it. We will be prepared for smart cards. We are constantly designing new products."

Another application Semtek is focusing on is identification. That focus already has paid off. Sarkisian says one of Semtek's software providers received a request from Nevada state law-enforcement agencies to work with Semtek devices on their handhelds to issue citations. What's next? Handing your credit card to the cop to pay the ticket?

While Semtek's future appears bright, Sarkisian sees obstacles facing the future of the wireless transactional marketplace.

"It's a fragmented industry, meaning there are a lot of people with various solutions on both the hardware and software side, transmitting data," says Sarkisian. "All that has to come together. Whether it be cellular-based phones or handheld devices, therein lies the challenge. Someone has to put it in a package that is simple for mobile merchants."

Semtek is banking on being an important piece of that package. "We are one part of the solution right now," says Sarkisian. "It could be the future for us once we dominate the magnetic stripe business. We want to make sure that if anyone wants to put a magnetic stripe on a handheld, Semtek is the company to do it."