by Terry Stoupa and Karen Hochman
WHEN WE HEAR OF WIRELESS PAYMENT ACCEPTANCE, most of us think of craft fairs or other unwired locations like golf course kiosks. While mobile merchants are large users of wireless payment acceptance, they are just part of a large merchant universe that needs wireless point-of-sale (POS) services. Wireless POS opens up credit card acceptance to many “fixed location” venues that have traditionally been restricted by transaction speed and cost—not necessarily mobility or wiring. And there are several benefits to both the merchant and the ISO/processor/acquirer that make a wireless solution easy and financially advantageous.
As with most technology, the world of wireless has evolved significantly over the last several
years. In the early 1990s, wireless terminals were bulky and extremely expensive; and analog wireless meant the
user paid the carrier in one-minute increments, at huge telecommunications costs. Merchants who used wireless did
so because they had no other choice if they wanted card authorization.
In the late 1990s, analog was replaced by lower-cost digital technology and a new generation of handheld wireless terminals debuted, at prices just a few hundred dollars more than dial-up terminals. Today, wireless credit card acceptance offers the merchant a faster and less expensive solution than landline communications. It’s not just for mobile merchants anymore. All major processors support various wireless hardware devices and services. The flexibility to use wireless continues to grow, accommodating hardware devices ranging from WAP phones, to personal digital assistants like Palm, to vending machines, to wireless modems that instantly convert dial-up terminals to wireless. Having a wireless solution has become a necessary component to any complete payments offering.
For ISOs, wireless payment acceptance opens up new markets. It allows sales agents to offer
added services to current customers. It introduces new revenue streams, and it increases current revenue streams.
New revenue streams come from being able to provide wireless payment authorizations to merchants where dial-up is unavailable or cumbersome. This includes dozens of under-served categories, from A (airport limos) to Z (zoo souvenir concessions — and for food and merchandise, other entertainment, leisure, and sports venues). Delivery services, home maintenance services, and transportation services —including towing are also hot areas for “mobile wireless.”
But even more profitable is the new world of “fixed-location wireless”: selling the faster/cheaper benefits of wireless to traditional retail merchants. A merchant can realize savings of $10 – $20 or more each month because wireless communication is more affordable in most areas of the country than landline communication. Many merchants currently using a dial-up line can benefit by switching to wireless, and ISOs can increase their monthly net bottom line per merchant by 10-30%. The merchant eliminates the monthly cost of the dedicated dial-up line, and the ISO’s wireless pricing includes a portion of that money saved. So the merchant pays less, the ISO earns more, and “fixed wireless” is a win-win situation. Going wireless is as easy as unplugging the dial-up terminal’s phone line from the wall, and plugging it into a device that transmits the transaction over the air, so there’s no need to invest money in a wireless terminal.
Beyond anywhere/anytime card payment acceptance, a wireless POS solution offers another considerable benefit to the fixed location merchant: speed. This is especially important for quick-service merchants who previously chose not to accept credit cards based on the 12 – 20 second transaction time. With wireless transactions of just 2-5 seconds, merchants see that accepting credit cards can be as fast as cash – and more convenient. For fast food and other restaurants with lunchtime rushes or stores with seasonal surges, taking credit cards wirelessly is now an efficient, cost-effective, and customer-friendly business advantage.
A key added-value benefit of wireless transactions is the ability to capture and report data in real time. In-depth reporting, available via the Internet, is a valuable portfolio management tool for ISOs, who can see at a glance what’s happening with each account. And from a revenue standpoint, online, real-time management information is a never-before-available business management tool that appeals to merchants as well. For the first time ever, merchants can evaluate transaction data in real time, take corrective action to maximize sales and profits, monitor fraud, and much more — and ISOs can charge a monthly fee for the service.
Some sales representatives hesitate to pitch their first wireless sale because it’s new to
them. But the learning curve is pretty shallow and the potential financial compensation is more than worth the
There are two aspects of wireless POS that need to be properly addressed up-front: carrier coverage and modem type. Agents must be educated, and in turn must educate their customers, on the availability of wireless coverage; and to be sure that they provide the merchant with a terminal whose modem is compatible with that carrier. For example, a chain with stores in New York and Atlanta might need to use two different carriers, because the carrier with the best coverage in Atlanta is different from the carrier with the best coverage in New York. (However, wireless networks are constantly expanding, so this will become less of an issue.)
No one single wireless carrier has a technology that covers 100% of the United States, although most of them cover 90-95% of metropolitan areas where most businesses are located. This means an agent must first query the merchant for all the locales where the terminal will be used, and whether they are indoors or outdoors. The information — down to the zip codes — is then input into online coverage maps to determine the best carrier. This way, the appropriate modem and terminal combination can be utilized to ensure the best coverage solution for each merchant.
There is clearly a large segment of merchants in need of wireless solutions. But there is
also a segment of traditional “wired” merchants that will convert to wireless — just for speed, lower costs,
and/or the real-time reporting capability. As traditional merchants become increasingly aware of the other revenue
and convenience-based benefits of wireless, and as their existing wired terminals age and need to be replaced,
knowledgeable merchants will implement a wireless solution.
As more traditional and mobile merchants become aware of the benefits that wireless offers, ISOs need to be prepared to offer them what they want. There’s no time like the present to get educated on how to meet the current and evolving needs of your customers, while improving your own bottom line.
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