e all know that to learn and move on is the best response to failure. The wise among us know it also applies to our successes. Charles Lee, founder and Chief Executive Officer of TechTrex Inc., is one of the wise.

As the former President of MIST Inc., Lee attained a pinnacle few of us ever reach. He founded MIST in 1998 and took it at lightning speed from a shoestring operation to a major provider of Internet transaction-enabling solutions.

MIST developed the first Internet protocol (IP) POS terminal for North America. The company merged successfully with NBS Technologies - a producer of dial-up POS terminals at the time - and became a large, publicly traded entity.

Then Lee stepped down. And he started all over, from scratch. Since he'd signed a five-year noncompete agreement with MIST for the North American region, Lee's new venture, TTI, took root in Asia in 2001.

"We've got somewhere around 30,000 IP devices in place worldwide," said Dave Ninesling, TTI's Senior Vice President of Sales, USA. "The lion's share are, of course, in Asia, but now the noncompete clause is no longer valid, and we've made a huge push in North America." TTI entered the Canadian market about two years ago and is now penetrating the U.S. market.

Some people might think it foolhardy for a startup to target a market that's all but sewn up by behemoths like VeriFone and Hypercom Corp. But then, back in the 1960s, there were those who laughed at a little car from Japan called the Toyota Corolla.

So where does TTI get its gumption? "We leverage international development and manufacturing capabilities to deliver solutions faster and at a much lower price point than current competitors," Ninesling said.

Quality for a song

The company provides "unique, cost-effective, high-quality devices in the credit card industry," Ninesling said. Its core products include POS terminals, IP converters, payment server devices and complete secure sockets layer (SSL) gateways:

· PrimeTrex: This is TTI's standard dial-up POS terminal. It features a 22-line-per-second Seiko printer with drop-and-load paper. "When many merchant level salespeople (MLSs) first see our printer, you hear them gasp," Ninesling said.

The terminal has four serial ports for peripherals; back-lit, hard-plastic keys; an ATM-style interface; and two separate hardware memory chips. "Most terminals have just one chip," Ninesling said. "With our PrimeTrex, you can have complete hardware separation of applications. And it's upgradable to a third chip."

This can ease implementation of ancillary products such as phone cards and gift, loyalty and check programs. "When you just have a single chip and put multiple applications on it, each time you add an application, you've got to recertify. And it becomes a nightmare," Ninesling said. "PrimeTrex is kind of like having two separate terminals in one."

· ConverTrex: This IP conversion device connects seamlessly to TTI's PrimeTrex dial-up terminals, or any manufacturer's legacy POS system, to slash transaction times. "Our dial-to-IP version of the device makes virtually any competitive dial terminal an IP terminal," Ninesling said. "You get a two-and-a-half-second transaction, and dial-up backups built into the terminal."

· CoreTrex: An IP hardware solution, CoreTrex can be installed at any Internet connection or placed on a local area network (LAN) with an Internet connection to provide real-time IP transaction processing.

"It's basically like having a physical terminal that everybody could walk to," Ninesling said. "We assign our CoreTrex device a static IP address ... and we put that somewhere on your network. Anyone who has access to your LAN can use Internet Explorer to point to that device and process transactions right from their PC. With a true virtual terminal, you access the Internet and go to somebody else's Web site to accept payments.

"With ours it's all local. It's secure, it's definitely faster, and it's definitely cheaper. It's also easy for us to update and support. It's an inexpensive piece of hardware as opposed to something that you not only pay upfront, but pay for every month, or even pay by transaction. And the functionality is a lot better than you'd get from a true virtual terminal product."

(TTI's CoreTrex was featured in the New Products section of The Green Sheet published Feb. 13, 2006, issue 06:02:01.)

· TTI SSL Gate: Geared for medium to large ISOs, this product consists of a computer with integrated gateway software designed to provide a high-capacity security gateway for payment transaction hosts.

"With this, customers can point IP traffic to their computer and then send transactions to the processor via a frame connection," Ninesling said. "So they're saving a penny or a penny and a half per transaction. When you do a lot of transactions, it's very easy to make a decision about that. ... Rather than have merchants in the field send transaction traffic to a processor's host, we reroute that traffic directly to the ISO's SSL gateway."

TTI's dual-communication, dial and IP version of the PrimeTrex terminal, the PrimeTrex IP, is scheduled to be available in March 2007. "Same speed, excellent price," Ninesling said. Also in the planning stages is MobileTrex, a low-cost mobile terminal scheduled for release in June 2007.

A competitive edge

Headquartered in Canada, TTI sells about 50,000 units annually and grew by 200% from 2004 to 2005. To penetrate the U.S. market, TTI knew it would have to be close to 40% cheaper than its competition without any sacrifice in quality.

"You cannot put a product out there that's second-best as far as quality goes," Ninesling said. "To provide top quality at a price that's 40% less is quite a challenge, and we've been able to achieve that with almost all our products."

Some of TTI's ability to produce a quality product at a reduced price is due to its ability to procure quality components at cut rates. "We have hard plastic keys, used in cell phone technology, as opposed to the rubber keys that you see on a lot of other terminals, and it's inexpensive for us to buy those up," Ninesling said.

Also, unlike veteran manufacturers, TTI doesn't have to support older technology in the field. "We're an innovative newer player with an industry-leading technology; we can keep our prices down," he said.

TTI's pricing might even declaw free-terminal programs.

"We're basically next to free, so we don't see free-terminal programs as a big competitive disadvantage to us," Ninesling said. "A lot of our ISO groups buy terminals at the right price from us and then do either one of three things: give it to the merchant free, give it at a very low price, or give it at cost to the merchant. ISOs don't have to mess with the merchant's account by charging them extra to defray the cost of the terminal."

According to TTI, it has already made substantial inroads into Canada's mid-tier ISO market. The Canadian market differs from the U.S. market, though. "There's a lot more competition here [in the United States]," Ninesling said. "You also have a lot more people who ... have tried a different terminal manufacturer that didn't work out. They just don't feel comfortable pioneering equipment again."

The word is out

Nevertheless, word is starting to spread about TTI. "People that have been willing to take a shot and beat up the terminal, drop-test it, and do anything that they want to it have found that the terminal is fantastic," Ninesling said. "And that's true of all our products."

Jill Ross, Merchant Officer in the merchant services department of Penn Security Bank & Trust Co., uses TTI's PrimeTrex and ConverTrex products. Penn Security is a full-service bank and processor.

"I started using the PrimeTrex because of the speed of printing and the terminal transaction capacity," she said. "And then I added on the IP converters, and the speed of the transactions combined with the speed of the printing is just phenomenal."

Ross sells PrimeTrex terminals to her merchant customers. "One nice thing is you can sell them the terminal first," she said, "It's so inexpensive; it's an easy sale. Customers love them, and then it's so easy to add on the IP part of it later."

Penn Security does all terminal deployment and support in-house. "Their help desk is always available, and they really know their products," Ross said. "And nobody at TechTrex minds you calling them or saying, 'Hey, did you ever think of doing this?' That's hard to find nowadays. I can't speak highly enough of them. They're so knowledgeable and so down to earth and easy to talk to at the same time."

Ninesling said that while TTI is a hardware company, it has strong software development capabilities.

"For specific ISOs or specific businesses, like check or gift card companies, we can write applications very quickly, very inexpensively and get it done right the first time," he said. "We have our own development staff, so we don't have to hire out like the big boys do. This allows us to manage not only the product and the application better, but also stay in better contact with the end user and client."

Here for the long haul

TTI also emphasizes education. "We make sure MLSs have everything they need to learn the technology," Ninesling said. "We'll send a trainer out, depending on the size of the ISO group, to teach them our products, and our salespeople are trained to educate our customers as well."

TTI welcomes the changes evolving technology brings. "At TTI, our objective is to stay ahead and provide industry-leading technology, quality and support at an aggressive price," Ninesling said.

One thing won't change, however. TTI intends to remain a private, manageably sized company with a very personal touch. "I'm the VP of Sales for the U.S., and you can pick up the phone and call me at any time," Ninesling said. "So as we gain success - and we know it's coming - we want to keep our arms around our growth and make sure we continue to offer the things we offer today."