What is the next wireless strategy? That is the question that the credit card processing industry is trying to answer. The problem, though, is that there is a three-layered answer for a wireless strategy the consideration of wireless terminals, the issue of wireless services and the gateway or platform to handle wireless transactions.
The market for the standard credit card terminal, using old data phone lines, is saturated. Every processor and ISO is already in the marketplace if the merchant has access to a data line, odds are there is a credit card terminal present as well. The market needs to expand and wireless terminals are the next logical step since they open new opportunities for mobile merchants. Their current standard, the "knuckle-buster," has been around since the dark ages, but carries concerns such as those regarding security, authorization, and settlement and funding delays.
Although wireless is the future of the processing industry, there is yet to be one clear and concise strategy that processors can follow. Analog was tried in the past, but was not successful because of costs and the immense size of analog terminals. Digital wireless terminals the DataTAC, Mobitex, CDPD devices are smaller, more lightweight and an overall convenient strategy. But wireless terminals using DataTAC or Mobitex may not be compatible with third generation wireless services such as GPRS or GSM.
Another issue is that, as the wireless revolution creeps into the point-of-sale market, most have implemented their own wireless strategy. This causes compatibility issues across the board. Wireless terminals are coming into the forefront, with the desire to find new markets. Whether the merchant uses a wireless PDA such as the RIM Blackberry, or the latest generations of the Pocket PC, Palm or Handspring or a wireless POS terminal from Hypercom, Lipman or VeriFone, how merchants and terminal manufacturers adopt new wireless technologies will determine their ability to adapt and survive the next five years.
Wireless terminals offer substantial improvements over standard dial-up terminals and the costs to operate wireless terminals are become increasingly competitive with the traditional dial-up data lines. Credit card processors need to handle not only analog phone lines, but also the wireless protocols, whether CDPD, DataTAC, Mobitex, or one of the third generation wireless networks. The wireless strategy must include a methodology to support networks, processors and various terminal types.
Because there are different network protocols for all three digital systems, processors and back-end servers need to adapt to better handle the systems. The issue of proprietary terminals and networks comes into play, as well as the need for a platform, before the processors can help the different terminals work together for merchants.
As there are so many different terminals, services and gateways, the challenge lies in getting all to speak the same "language." A device-independent architecture can provide a new way to conduct POS transactions and provide a solution that can support all major wireless networks and wireless terminals. In the case of a merchant using a variety of terminal types, there must be a platform that allows them to work together. By building a software developers' kit, with specifications on how to program the terminals and devices to interact with one platform, a variety of wireless terminals, services and networks can be used and will all report back into one information center, via the platform.
Even if a processor takes the digital plunge and integrates a small handful of wireless networks, the challenge shifts to the operational side. The processor now must provide provision and support, and scale each wireless connection and the corresponding terminals using the network for access. Gateways do solve some of these problems, since processors can buy one line from a gateway and use any of the wireless networks supported by that gateway. With a gateway, a company could have 10 or 20 different systems all going through one gateway. But the gateway does not help the terminals to work together. The burden of scalability and supportability is now on the gateway provider, freeing up credit card processors and terminal manufacturers. Gateways rely on the capabilities and are often hampered by the limitations of the networks to provide compression, transaction integrity, quality of service, security and more. In theory, this is great; in reality, the burden has just been shifted without the problems being solved. These problems will exponentially grow, depending on the number of processors the gateway services. Thus, the rationale behind using a gateway is moot.
The next generation is not just about aggregation, but migration. The intelligent gateway, the platform, acts as a common, consistent, end-to-end infrastructure for all components regardless of the network or device. The platform will pay off, when compared to the current gateway solutions, not only for merchants but processors, banks and terminal manufacturers. The gateway system only answers which network to use; with the platform system, any network, infrastructure or device can be used. Terminal manufacturers, processors and developers don't have to update, re-certify and support every component and terminal.
With the platform structure, all the certification is handled prior to implementation and older devices can be used no matter what the processor's system. With a platform system, wireless terminals can work together when linked through the same infrastructure. A system can be put into place that can handle the different networking systems and wireless services. If a merchant is using Mobitex or DataTAC for wireless services and switches to terminals using third-generation wireless services, such as GPRS, the platform would have to be built in such a way to handle traffic from all current and future wireless services which is possible. Instead of updating and certifying networks and terminals, merchants can rely on a platform that abstracts certification. The platform supports the same architecture regardless of the network or terminal, allowing for efficient scaling and support of emerging network and devices.
The introduction of new products and services specifically geared towards the mobile merchant is pushing the industry to the cusp of radical change. There is a great need for a full solution, regardless of processors, networks, services or terminals. The need for a complete wireless framework, gateway and architecture a complete platform service that provides that end-to-end infrastructure is the greatest part of any company's wireless strategy.
The sound wireless strategy does not concern itself solely with today's wireless offerings, but thinks of the future. And that future is now.