ISOs And The POS Phenomena
The bankcard industry continues to change and consolidate, and nowhere within the industry is this more apparent than in the transaction processing arena. Prior to 1980 the marketing approach now known as the Independent Sales Organization (ISO) did not exist. Beginning with the first ISO contract (April 1980) between National Processing Corporation (NPC) and Unlimited Marketing Services Association (later to become AMCOR), the first non-bank employees began selling merchant bankcard acceptance to prospective bank customers.
Point-of-Sale terminals were not a consideration when all this began. The banks had introduced terminal credit card processing to their highest volume merchants in 1980, with the GTE microphone, renting the equipment to the merchant for $50 per month and offering no reduction in rate. VISA/MasterCard then introduced Tirf & Aid and began promoting electronic transactions as a fraud reduction tool and offering a rate reduction incentive for terminal authorization.
By 1984 terminals were beginning to show real promise, with nearly 5,000 units in the U.S. marketplace. The introduction of draft capture in 1986 made the marketplace explode during the next three-and-a-half years, allowing more than 350,000 terminals to be placed in retail outlets by 1988.
By 1990 there where 920,000 POS installations worldwide, growing to 2.6 million by 1996. With a projected growth rate of 16.3% through the end of the century, POS installations are expected to hit 5.5 million by the year 2000. It is estimated that about 40% of all terminals have been, or will be, placed in the U.S. Overall, it appears that ISOs have enjoyed the income on some one million POS terminals over a ten year period. There is the possibility of another million units through the end of the decade, as terminals are upgraded with new technology, replaced due to new features, and placed in new merchant locations.
