hen I travel overseas on business, I'm invariably amazed by how many business people are bilingual: it seems to be a de facto requirement for commerce. ISOs/MLSs and acquirers also need to move to a 'bilingual model'-in today's payment world, they need to be conversant not only in the language of dial-up, but also in Internet Protocol, or IP.

As pointed out in The Green Sheet ("Use IP Technology to Advance POS Capabilities," April 14, 2003, issue 03:04:01), there has been an explosion of advanced communications options for payment, such as DSL, VSAT and the ever-popular variants of WiFi.

True, some of these alternatives might seem to be overkill for smaller retailers. But the benefits of 'always-on' capabilities, speed, integration and cross-channel marketing will continue to reach down-market, and the advantages of using IP technology will become more apparent. At a minimum, we are in for an extended period where dial-up and high-speed will coexist as communications options. As a result, payment service providers need to quickly learn the language for both.

An example of a 'bilingual' situation: Burger King Corp. recently began equipping its corporate and franchise locations with payment terminals as part of its recently announced "Pay It Your Way," a nationwide card acceptance program.

Driven by requirements for speed of service at multiple lanes per location, Burger King needed a solution that could take advantage of high-speed Internet communications being deployed at most, but not all, locations.

Because the complete rollout of broadband at all Burger King locations will take time, the company also required a solution that could exist in either environment. This single solution would ideally enable a migration path from traditional dial-up to high-speed communications with nothing more than a cable change.

Burger King found such a solution with a 'dual-comm' device, which provides both legacy dial-up and broadband Ethernet options in one terminal.

Bringing the speed, reliability, affordability and versatility of IP based technologies to the POS is arguably one of the most important technological advancements to touch the payments industry in recent years. Processors, acquirers and ISOs who are quick to embrace these solutions will most likely gain the greatest market advantage.

Along with very fast, end-to-end transaction speeds over wireline or wireless networks, IP also supports 'always-on' connectivity, which eliminates the time consuming dial-up process. IP solutions provide reduced merchant processing fees, eliminate the need and cost of additional phone lines and long distance charges and facilitate the extension of corporate systems to the store level.

These high-speed services are a huge advantage for merchants, particularly in market segments such as Quick Service Restaurants (QSR) where speed is essential.

QSR, once the slowest segment to adopt card payment technologies, is moving quickly to embrace faster processing methods because fast and efficient customer service directly equates to more revenue. The Texas-based Taco Bueno restaurant chain recently opted for IP partly because of three-to-five-second 'swipe to tear' transaction speeds. IP technology is everywhere. It is now embedded in essentially all leading wireline and wireless network communications. This includes dial-up network services, a broad selection of high-speed wireline networks, such as Digital Subscriber Line (DSL) and cable modem.

Even the nation's cell phone carriers offer 'WiFi hot spots' and are making upgrades to their existing wireless Internet services. For example, Verizon Wireless recently announced it will put $1 billion dollars toward improvements to its wireless CDMA network; the company hopes to support data rates of up to 2.4 megabits per second, which is faster than DSL.

The growth of IP makes it possible to integrate a variety of devices and communications methods. Many large retail organizations with LAN-based Ethernet IP POS systems are experimenting with the addition of mobile WiFi IP devices for 'lane-busting' applications such as mobile register and self-service check-out, and the integration of inventory and price-checking applications.

In the multi-lane payment environment, POS terminals have traditionally been connected to electronic cash registers (ECRs) using serial connections such as RS-232 or RS-485.

This has required proprietary software and protocols and specialized cabling. IP-based payment devices, however, can efficiently operate within any LAN environment, wired or wireless.

Instead of connecting POS devices through ECRs, retailers can connect payment terminals directly to their corporate LAN, legacy environment or to a service provider's central server over an external network.

IP-enabled POS terminals and high-speed network connections also hold great promise in several other vertical market segments and application areas.

The Health Insurance Portability and Accountability Act (HIPAA) is forcing health plan administrators and care providers to comply with Electronic Data Interchange (EDI) rules for specified administrative and financial transactions. As a result, health insurance carriers and providers need secure, low-cost and easy-to-use EDI payment solutions.

IP-enabled terminals will allow physicians to quickly, efficiently and securely obtain insurance information and pre-authorization for services, handle card-based payments, and even review patient records and share medical history as needed.

Given the range in sizes of medical organizations, from single practitioner offices to huge HMOs, ISOs and acquirers will need to be able to offer a variety of options, from dial-up to wireless.

Electronic benefit transfer (EBT) is also a prime market for IP deployment. The State of Wisconsin last year initiated the first ever code division multiple access (CDMA)-based wireless deployment of a POS payment solution in the United States. To process EBT cards at Fondy Farmers Market in Milwaukee, VeriFone's Omni 3600 wireless payment terminals use TCP/IP over a data-packet network.

IP is a universal language, making it an excellent choice for implementing in cross-border acquiring. Payments services providers don't need to invest in separate infrastructures in each country in which they conduct business. IP technology relies on open standards, which will allow providers to quickly and economically target the customers they desire, wherever growth opportunities may lead them.

Last year, VeriFone worked with VIVO, the largest wireless telecommunications company in South America, and Visanet Brazil to deploy a CDMA-based wireless payment solution in Brazil's largest open-air market. As the market does not have telephone or power lines, merchants previously could only accept cash and check payment options.

Many value-added applications will necessitate linking to non-bank host computers using a wide area browser-style interface, or requiring large file transfer capabilities. While such applications would literally stall dial-up terminals, IP-enabled terminals operating over high-speed networks will make these exceptionally efficient, opening new revenue opportunities for retailers and service providers alike.

Additionally, a thin-client solution, coupled with a fast 'always on' connection, optimizes the multi-application environment, supports a mix of payment and value-added applications, and reduces the need to download application updates to a large base of terminals.

The payments industry will continue to be subject to a world of change. As retailers operate in an increasingly competitive environment, each merchant must strive to create and maintain an advantage. Improving customer service through faster, more efficient payments will be crucial to increasing sales; so will the ability to gather as much information from the point of sale as possible.

Payments services providers will have to work hard to meet the requirements of merchants and other organizations in the face of rapidly changing communications technology. ISOs, MLSs and acquirers will need the ability to 'speak' in multiple 'languages' in order to provide the right solution for each customer.

Paul Rasori is VeriFone's Vice President for North America Marketing and plays a key role in helping VeriFone customers integrate current payment and communication technologies. He can be reached at Paul_Rasori@verifone.com