The Opportunities in Smart Cards

by George E. Devitt

   The world is changing rapidly and the old way of managing commerce devices is no longer sufficient. The technology landscape is shifting from wired to wireless, from vendor independent to multi-vendor and from dummy devices to smart devices. It�s not to say that all wired devices will shift to wireless. On the contrary, the shift will occur towards smart wired and wireless devices. For merchants, processors and acquirers this change is significant. Payment applications that were once straightforward are now more complex with multiple applications being delivered and additional updates necessary.
   The market opportunity is enormous. According to The McKenna Group, the pervasive computing market will be worth $120 billion by 2006. Mobile computing will be a $70 billion market by 2004 with mobile commerce becoming a $230 billion market by 2006. Pervasive commerce devices are devices used to conduct financial transactions and are the access point for such transactions. These devices include those that are wired as well as wireless, for example, debit machines, point-of-sale terminals, PDAs, ATMs, kiosks, gas pumps, slot machines and smart phones. The explosion of pervasive commerce devices and their continuing acceptance as financial transaction access points will facilitate the need for a monitoring and administration solution.
   The fact that there are multiple vendors, multiple platforms, multiple operating systems and the lack of management solutions all compound the issue.
   When problems with a device arises, the most common solution is to replace it, despite the possibility the problem lies elsewhere on the network. The new reality for merchants, acquirers, processors and ISOs is that multiple applications must be monitored and administered from one central console, ideally using a vendor-independent, end-to-end solution. An advanced central point-of- management solution is essential for succeeding in today�s world. Indeed, these devices are essential because they are mission critical, they are increasingly smarter, there are more of these devices flooding the wireless market and people are increasingly more dependent on them. Thus, when the device goes down, or it has reached its potential threshold and there�s nothing to manage it, support costs increase, customer loyalty decreases, a sale has been lost, a company�s revenue target is not met and it escalates from there.
   One of the most common hurdles that ISOs face is a lot of these devices straddle many different platforms, thus making it increasingly difficult to find one solution that can manage all of their customers. The most reliable and cost-effective solution is to have an N-tiered-based solution. N-tiered-based involves multiple agents serving multiple platforms which are able to monitor all of these mission critical devices.
   Specifically, the market segments most affected or in need of this solution fall into four categories: hardware manufacturers, acquirers, processors, ISOs and merchants. Each one can benefit from the value proposition offered by a vendor-independent, central point-of-management. The new reality for the industry is that multiple applications must be managed across large, complex and changing networks of devices. An advanced central point-of-management solution is essential for providing the device reliability that traditional devices are recognized for.
   Hardware manufacturers that continue to provide additional value to their POS devices will succeed at attracting new business, increase revenue streams and gain market share. In turn, the same manufacturers that deliver a reliable management solution that adds value to the merchant-processor relationship will increase demand for their POS devices and, as a result, expand their customer base and gain market share.
   In business today, it is very difficult to stay focused on what you do best. By partnering with a company that is able to deliver this solution, hardware manufacturers can better utilize their resources to focus on their core competencies.
   Acquirers, processors and ISOs tend to fall in the same category, resulting in the same needs and outcomes from a management solution. They want to improve merchant retention, reduce training and support costs and increase revenue. To do this, they need to target a solution that delivers compelling incentives for merchants to work with acquirers and processors that implement advanced device and application combinations. For instance, unique two-way merchant bank/processor communications capabilities, faster device fault isolation and proactive problem resolution boost merchant productivity and maximize their device. Any solution that can help them reduce their training and support costs would likely be welcomed. A solution that allowed them to administer, troubleshoot and upgrade their network from a central location, regardless of the number of vendor-specific applications already installed, would result in greater savings that could be passed on to the merchants for a competitive advantage.
   Training and supporting merchants can be very costly. Finding the right solution can eliminate many of these unnecessary costs. It can decrease the number of help desk calls, reduce the time needed to identify and resolve device problems and diminish hands-on training and support costs as these services can be administered remotely. And acquirers can enhance their revenue stream by expanding their service offering by providing the merchant with exceptional remote training and support.
   Merchants will benefit greatly as well. By utilizing a central point-of- management solution, merchants will increase staff productivity by decreasing down-time, minimizing training time, reducing application download time and decreasing POS device resolution time. Many merchants are using a variety of competing vendor POS devices to support their business. Merchants who invest in a central point-of-management can have all their POS devices managed under one central location regardless of POS manufacturer. Merchants that deliver a more convenient and capable POS solution with various payment options will gain market share, build customer loyalty and increase competitiveness, while processors and banks who cost-effectively deploy and manage POS device applications can boost revenues, increase merchant retention and reduce training and support costs.
   This new era of computing is increasingly complex. It involves additional powerful applications, an abundance of devices from a variety of vendors and cost pressures of delivering e-payments and e-services. An advanced central point-of-management solution is essential for success. The world is changing rapidly. We cannot afford to be left behind.

George E. Devitt is Senior Vice President and Chief Marketing Officer at Hypercom Corporation. Visit the Hypercom website at

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