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Street Smarts:
It's Time to Cut the Cord

By Ed Freedman

This column is dedicated to all those MLSs who are afraid to venture away from selling only traditional credit card and debit processing services. Poor babies! Is the competition leaving you behind? Or are you upset because you don't have access to training and your merchants want solutions that meet their needs today...not 10 years ago? Stop your whining and "cut the cord!"

I will help you cut that cord and free yourself to sell wireless processing solutions. Like it or not, wireless processing is here to stay. In our continuing commitment to learn how to sell a new value-added service this year, let's leave our comfort zone and embrace wireless products and services.

Let's look at the basics such as what exactly wireless processing is and how it works, and then explore some of the options available in the marketplace.

Also known as mobile commerce (m-commerce), wireless processing offers merchants the capability to accept credit cards anywhere and anytime with a wireless merchant account. Whether merchants have a service business that works at a customer's location (e.g. plumbers, contractors), or if they take their retail businesses on the road (e.g. taxicabs, swap meets), wireless processing is an easy and cost-effective way for merchants to accept credit cards wherever transactions happen to occur. Additionally, if a merchant's landline terminal or computer modem is tied up, a wireless option can supplement these other processing systems.

Many different types of businesses in certain mobile industries find wireless processing particularly appealing and enjoy tremendous success with it. These merchants find that wireless terminals are increasing sales, saving time and reducing operating expenses. They include:

  • Automotive Services: service stations, auto repair, towing, car washes, parking lots, mobile windshield repair
  • Delivery Services: furniture and appliances, movers, overnight express
  • Food Services: concessions, fast food, food carts, food deliveries, restaurants
  • Home Maintenance: carpet cleaning, contractors, heating and air, locksmiths, plumbers, electricians
  • Mobile Services: door-to-door, tool trucks
  • Retailers: craft and art fairs, mall kiosks, outdoor markets, newsstands, souvenir stands
  • Sports and Entertainment: amusement, theme parks, arenas and concert halls, golf courses, racetracks, stadiums
  • Transportation: airport shuttles, ambulances, radio cars, buses, ferries, limos and taxicabs, touring services
With m-commerce, there is no need for phone or electrical outlets. Transactions take only a few seconds to complete. Wireless credit card processing terminals are available in retail form (to swipe cards) or for real-time card-absent transactions (to key cards). Wireless processing, isn't all that new. The acceptance method has been around for a few years, but it's really starting to have an impact on how merchants do business outside of the typical brick and mortar environment.

Starting with wireless terminals at the point of sale, m-commerce has evolved to cellular phones and PDAs. Because of the nationwide popularity of these devices, manufacturers have made significant improvements to their equipment and have added features to attract more customers and meet the demands of the marketplace.

Those demands translate into benefits for merchants and MLSs. Before wireless solutions became available, collecting funds for transactions made on the road required accepting cash or checks, or manually writing down credit card information to process back at the office or retail locations-risky business, to say the least. Cash and checks get lost. Unsecured credit card information is subject to theft. These problems are resolved with secure, cost-effective wireless solutions.

In addition to reducing risk, wireless processing improves cash flow and speed of transactions. Secure credit and debit card authorizations are done within a matter of seconds. Credit card fraud and chargebacks are reduced. All this has been accomplished through the ability to conduct business where phone lines don't exist.

Two companies at the forefront of wireless technology are Comstar Interactive Corp. and Lipman USA. Recently, I had the opportunity to discuss the world of wireless with them and ask their opinions on MLSs selling their products. I asked the following questions:

  • Which wireless products would you recommend MLSs include in their packages?
  • What sets your wireless products apart from others?
  • What are the major selling points of your wireless products?
  • How would you recommend MLSs present your wireless products?
  • How do MLSs benefit by selling your wireless products?
Here's how they responded:

JD Gardner, CEO of Comstar, recognizes that there are a number of wireless terminals in the marketplace that MLSs might consider. He recommends MLSs think about their target merchants' needs for wireless solutions, identify a few terminals that fit those needs and then spend time learning the products' features and benefits so they can be passed along to the merchant.

For example, MLSs might consider including Comstar's CHARGE ANYwhere for customers who want a handheld solution for credit card transactions. Other examples include the Lipman NURIT 8000 or 3010 that have a self-contained printer and can be used for credit and debit card transactions in wireless or dial-up modes and LinkPoint's wireless products.

Gardner stressed that another area, wireless gateways, can be used with the devices in order to offer more value-added services, such as check services, gift card services, wireless device management and real-time transaction management and reporting and capabilities.

Gardner said MLSs should be aware that the CDPD wireless networks operated by Verizon and AT&T that were once the standard for processing in the early days of wireless POS are being phased out beginning with AT&T in June 2005 and Verizon in 2006.

The wireless devices that operate on the CDPD networks will cease operating at that time. There is presently no way to economically upgrade a CDPD terminal to allow it to continue to operate after the networks shut down.

Comstar's CHARGE ANYwhere is a hand-held device that can complete a swiped credit card transaction in five to seven seconds. It can also be used as a merchant's transaction processing center for capturing business-critical information via a secure Web site for use later for authorizations, forces, voids, sales or returns, check services-and for gift card/private billing card services to be offered in the near future.

Transactions are encrypted before they are sent over the air. A store-and-forward feature is available when merchants are beyond coverage areas. Receipts can be sent wirelessly to an e-mail address or a fax machine or printed via a portable printer connected through the device's serial port.

Merchants can configure their devices over the air from the Web, to set passwords, change printer receipt headers and fraud protection controls, and view their transactions in real time online. With Comstar's built-in virtual terminal, merchants can also perform transactions via a Web browser. Comstar's product also does double duty for wireless e-mail, using Cingular or Motient's two-way messaging service, making it a good choice for mobile merchants. Comstar sees several benefits for MLSs selling their wireless products. New products to sell equal new hardware commission opportunities for MLSs. More services at merchant locations equal more residual revenue streams and reliable business partners that will support the MLSs' sales efforts. Gardner believes MLSs will greatly benefit from selling a Comstar solution because it creates a long-term relationship between the merchant and the MLS. At the end of the day, that's a win-win-win proposition.

The other wireless provider I spoke with, Lipman USA, offers a full line of wireless solutions for payment terminals. The company's recommendation for MLSs is the NURIT 8000Secure terminal.

Through its NURIT line, Lipman currently offers its fifth generation wireless terminal in the U.S. market. The latest model, the NURIT 8000Secure, offers multiple wireless network choices depending on customer needs. It is fully compatible with other NURIT products and this compatibility feature enables the same application currently used for dial-up terminals to be used on the NURIT 8000Secure, minimizing support costs and training. MLSs already familiar with NURIT products do not require additional training on a new platform.

NURIT terminals are designed to accommodate various market needs and support a wide variety of wireless network technologies within a product. MLSs can choose from Mobitex-Cingular, Datatac-Motient, GPRS or CDMA technologies and offer different configurations for each wireless provider to merchants.

The store-and-forward feature enables merchants to accept payment, even if the terminal is out of network coverage. Moreover, transaction speed is much faster compared to a dial-up terminal, where the transactions are processed in between five to 12 seconds depending on network coverage and strength.

Lipman urges MLSs to identify the needs of the specific customer. Sometimes this is mobility-namely, the need to run transactions on the go or at the doorstep of a customer. Other times it may be the speed of the transaction that provides the merchant with value.

According to Lipman, MLSs should also understand how merchants plan to use the device. Whether merchants will use the terminals within a specific area or use the terminals in different cities may affect the choice of the wireless network provider.

After I spoke with these providers, I asked MLSs for their opinions on selling wireless products and services. I posted the following questions on The Green Sheet Online's MLS Forum:

  • What benefits do you get from offering wireless services?
  • Do you offer this for financial gains or to improve customer satisfaction and retention?
  • If you don't sell wireless products/services, what is the reason?
Here's what a few MLSs had to say:

"I tried to sell a few wireless units, but found that most of the merchants became disinterested in the product.

"They did not understand why they had to use a phone service to accept credit cards and the monthly cost was generally too high for a customer just starting to accept credit cards. The one wireless unit I did sell was a nightmare.

"The merchant did tradeshows in areas where the unit wouldn't work and the back-end help was non-existent. I ended up exchanging the wireless unit for a wall unit. I have stopped offering wireless units unless asked because of the headaches involved." -jmartin

"I would love to offer more wireless solutions at an affordable price but I seem to be in a 'dead' area for service. I've tried everything from Comstar to Palm Pilot PDAs." -destin5440

"Wireless payment processing solutions have become the focus of our sales strategy. With the introduction of products such as AirCharge and Creditel, we can now utilize Nextel, Verizon and Sprint PCS data networks, which are much more robust than Cingular Data and Motient, which have been handcuffing the wireless merchant until recently. Both printing and swipe-only solutions through cell phone processing have opened the door to markets that have been deprived of suitable coverage for so long.

"The introduction of 'solid' wireless gateways such as eProcessing Network has rid us of the issues related to duplicate transactions due to faint or lost signals and the addition of real-time, Web-based reporting and online transaction processing complete the package." -Eric Eichlin, President, ePay Management

"We have sold many wireless solutions in the past but have backed away from doing so this year because we feel that there is not a solid solution out there. The list of problems that wireless presents is bigger than the benefits.

"We will start to promote wireless service when the terminal manufactures make a more sturdy, robust terminal that can handle the abuse of a services man or contractor.

"Also, there are many areas where there is no signal to run the transactions. Last month at the Visa Acquirer Educational Settlement Workshop meeting in Foster City, Calif., Visa mentioned that it recently asked the large terminal manufacturers to address these issues formally." -Matthew Swinnerton, Merchant Services Direct

I agree with many of these comments...for instance, you must select a terminal that works and meets the needs of your merchant and you must have coverage in the area where the merchant is located.

If you do your homework, this market can prove to be very lucrative. Reliable wireless service is available nationwide. Here are three sites that will help you check if coverage is available in your merchant's area:

One thing I found interesting was the statement from Comstar's Gardner: CDPD units (the coverage that was originally sold when wireless first became available a few years ago) will soon no longer work. When this happens, all those merchants who signed up for that service and still need a wireless solution will have to start all over again and find a new terminal and a new service provider.

Here is a huge opportunity for both new equipment sales and signing new merchants for credit card processing services. Make sure mobile merchants are aware of this.

Establish a target market plan to attract merchants that will benefit from your wireless solutions. Approach organizers of trade shows, swap meets and flea markets. Contact taxi and limousine service trade associations and groups.

Look at service industry associations and unions for electricians, plumbers, locksmiths or computer service/repair; another proven lead generator-chambers of commerce. The next time you attend a chamber mixer, introduce a new member benefit geared toward potential wireless customers. The goal here is to turn these relationships into lead-generating machines.

Once you've generated leads and set up meetings, start your presentations by asking questions that will bring out the potential savings that come from discount rates and phone service.

Ask merchants if they'd like to save about $50 per month by eliminating a dedicated local phone line. Ask them if they'd like to eliminate the need to rent a phone line at trade shows. Ask them if they'd like to not have to use their cell phone service when calling in for expensive voice authorizations.

And ask them if they'd like a better discount rate with savings of at least 75 basis points by swiping instead of keying. With a merchant doing $10,000 per month in sales, that's $900 per year in savings-less than the cost of a new terminal.

The key to closing a wireless sale is making sure you compare the cost of the merchant's continued landline use versus wireless, as well as the money saving feature of obtaining a swiped rate versus a keyed rate. Include the benefits that wireless services provide such as real-time credit card processing, mobility, faster transaction speed, ease of use, flexible floor plans-and of course, saving money.

Help merchants understand they will no longer have to make time-consuming telephone calls for voice authorization. Help them realize they will no longer have to remove their POS terminals from their stores or rent a phone line at a remote location. Let them know they won't have to connect their POS terminals to cellular telephones in order to complete a sale. Tell them they will no longer assume the risk of making credit card sales without on-site real-time authorization. Tell them they will save money.

You can see that I'm quite excited about wireless opportunities. And you should also be excited about selling wireless equipment and services.

This is an untapped market where you can make substantial upfront revenue while building long-term residual income. At the same time, your merchant ends up with a money-saving solution. Bottom line-get out there and start selling this stuff.

My next column will take you on a trip to a virtual world where you'll discover real opportunities on the information superhighway. We'll examine e-commerce products and services, including Internet gateways.

Look for my upcoming post on the MLS Forum. As always, I'd love to hear from you. Please send your comments on this and any other topic to me at streetsmarts@totalmmerchantservices.com. I cannot stress enough that your voice needs to be heard.

Learning is not attained by chance, it must be sought for with ardor and attended to with diligence."

-Abigail Adams

See you next time where the rubber meets the road.

Ed Freedman is founder and President/CEO of Total Merchant Services, one of the fastest-growing credit card merchant account acquirers in the nation. Ed is the driving force behind all business development activity as well as the execution of Total Merchant Services' marketing plan, including recruiting and training independent sales offices and establishing strategic alliance partnerships with leading vendors, so that Total Merchant Services can provide its customers with the highest quality and most reliable services available.

To learn more about Total Merchant Services, visit the website at www.totalmerchantservices.com. To learn more about partnering with Total Merchant Services, visit www.upfrontandresiduals.com or contact Ed directly at ed@totalmerchantservices.com

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