Every new application placed on a merchant�s terminal does two things for a payment services provider. First, it strengthens the business relationship and improves merchant retention by providing valuable new services. Second, it extends the ability to generate new sources of fee revenue.
   Since its inception, one of the primary attractions of e-payment has been the convenience that it provides consumers and merchants alike. In today�s market, however, merchants are primarily motivated by low transaction fees.
   Moreover, many ISOs are finding it difficult to rely solely on residuals. As a result, ISOs must not only match competitive prices, but also offer other innovative programs and services to increase merchant retention.
   Value-added applications and services can transform the point-of-sale into a point-of-profit. By increasing the number of applications on a retailer�s countertop, ISOs can significantly enhance their relationships with their merchant customer base and reduce attrition rates. Equally important, the increasing number of value-added solutions offers an extraordinary opportunity for ISOs to generate new sources of revenue and profits.
   �Offering multiple value-added applications running securely on the same terminal makes it easy for me to differentiate my offering, retain current customers with better service options and penetrate new markets,� said Bud Jenkins, president of Peak Card Services, Inc.

   In recent years, payment options have expanded considerably. In addition to a broad spectrum of traditional payment methods, value-added applications � from gift cards to pre-paid phone cards to age verification and electronic bill payment � are becoming highly attractive for both merchants and payment services providers.
   Many of the value-added services running on countertop payment terminals produce additional transaction and services revenue for the organizations that develop and implement them. Additionally, these more profitable applications lend themselves to a revenue-sharing model, making them attractive for merchants and third-party service providers involved in creating or operating the solutions.

   The growing variety of payment-related and value-added services also offers an ideal entr�e for ISOs to penetrate new vertical market segments.
   For example, electronic gift card programs can open doors for ISOs in traditional retail as well as quick-service restaurants (QSRs). Applications such as pre-paid telco, bill payment and age verification hold significant appeal within the petro/c-store industry. In government and health care, countertop terminals not only efficiently handle payments, but also offer solutions for validating recipients, submitting claims and automating licenses.

   Pre-pay applications such as telco top-up and electronic gift cards are proving to be among the fastest growing types of value-added applications worldwide. For consumers, prepaid cards and calling plans are easy to buy and simple to use. They provide real freedom with regard to choice, access, service and payment mechanisms.
   For operators, prepaid solutions reduce the risk of fraud and bad debt � because customers pay in advance � while also increasing the availability of funds for network investment. And for payment services providers, pre-pay reload solutions represent another value-added program to sell that improves merchant retention and generates fee income.

   One of the most exciting value-added applications for retailers selling alcohol, tobacco or other age-restricted items � or that operate age-restricted establishments such as movie theaters, bars or casinos � is automated age verification.
   Automated age verification can run on the same terminals that are used for payment. The application reads the license, automatically calculates the person�s age and displays a message on the terminal indicating whether the purchase is allowed or not.
   �Merchants understand the tremendous value of a multi-application POS terminal when they see how it can support their needs beyond just payment,� said Bruce Schratz, president of Tennessee-based Payment Transaction Solutions. �Stores using [automated age verification] also create goodwill with their community because this solution sends a powerful message to customers that the store is taking special measures to control the sale of age-restricted items.�

   The area that may hold the most potential for profits over time is merchant business services. Services such as two-way messaging, electronic couponing and payroll services can measurably improve a business� operations, in addition to being ideally suited for countertop payment terminals.
   Two-way messaging solutions can transform a terminal into an important profit-producing platform. Two-way communications power replaces the expensive and time-consuming methods of communicating with merchants via phone, mail or fax. Payment services providers can send customized text or graphics messages to any or all of their merchant customers, easily and efficiently. This includes help desk information such as software updates, service notifications or fee changes.
   Merchants can also use the terminals to quickly and easily order supplies, inquire about a chargeback, or report a problem. Additionally, messaging generates new revenue streams by supporting services such as sending electronic coupons to print on receipts, facilitating supplies/consumables ordering and even allowing third party users to send messages to merchants� terminals.
   By expanding the variety of applications provided to merchants, ISOs can deepen their relationships with customers, while greatly enhancing their revenues from services offered � transforming the point-of-sale into an attractive new point-of-profit.

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