Opening the Door for Portability
Today, the vast majority of EFT POS terminals are programmed using a developing kit that produces an application that is unique to a specific terminal. Several manufacturers provide development environments that allow the terminal manufacturer to develop one program that can reside on several of different terminals within the vendor's range of terminals. This "portability" is an attribute that allows the terminal vendor to leverage a single application to reduce development time and allows the acquirer to spend less time certifying and deploying terminals.
Portability Opens Opportunities
However, as payments and their platforms grow more complex, the industry's ability to support this growth and complexity will be limited. With the issuance of magnetic stripe and chip cards, there will be significant pressure on merchants and service providers to enhance their payment terminals to support smart cards and multiple applications such as loyalty and electronic gift certificate.
Additionally, unknown to many, is the opportunity in the electronic cash and access markets that leverages the same smart card technologies as used by issuing banks. Although the Blue Card was successful in opening a new market for American Express, the Company realized after distributing card acceptance devices for home use, that full utilization of the card's capabilities by cardholders would not be easy. Studies found that a very small percentage of those that were issued readers actually installed them.
In Europe many people are able to use their cell phones to make purchases as a result of using personalized SIM cards and the GSM protocol. GSM will replace CDPD and other wireless protocols in the US. SIM card technology is a requirement for GSM.
We will witness a propagation and maturity of technology in the next few years that will allow acquirers to enter new markets and increase their presence in existing ones. Clearly, the ability of acquirers to work with this technology will provide a point of competitive differentiation.
However, the inability to leverage applications across multiple EFT POS platforms, PDA's, cell phones, vending machines, and within the electronic commerce market will limit the expansion and growth of companies serving the merchant bankcard industry.
The Global Platforms Organization
People from several different companies and associations formed the Global Platforms group and are hard at work designing a way to allow a single application to run on any payment acceptance device. Although not common-place today, vendors, processors and acquirers need to be aware of the trend towards "Open Platforms" so that it can be leveraged to reduce support costs while opening new markets.
What is Open Platforms?
Open Platforms is a software architecture to develop portable applications for many different card acceptance devices. An application developed using the Open Platforms framework can reside on many different devices that need not be manufactured by a single supplier. An example of the open platform concept is your desktop PC. PCs are manufactured by many different companies and those companies, in turn, source components from a host of suppliers. In spite of this, your Windows operating system and desk top applications run on any of them without modification.
Leveraging Open Platforms, you could program a counter-top EFT POS terminal to accept a credit card while using that same application to provide credit card acceptance for a smart card reader that is integrated in a Coca-Cola vending machine. Additionally, the same application would allow you to securely make purchases using a chip-based credit card with your home computer that has a smart card acceptance device connected to it. That single application was leveraged to provide credit card acceptance in an EFT POS terminal, vending machine and for secure Internet commerce.
The Value of Open Platforms
Open Platforms can reduce development and certification costs by leveraging that single application across many different and varied payment platforms. A single application is of great benefit to help desk and support organizations. One application with a similar user interface reduces education time and simplifies support. Open Platforms will also provide a processor or acquirer the ability to leverage a single core application set to expand into new market segments with similar payment needs. Acquirers will also have the ability to use a single application across multiple hardware platforms all manufactured by different suppliers. For application programmers, this technology reduces the time and cost of software development, while making software reuse a reality.
Although Open Platforms is not quite a reality, we are making progress towards this common goal. The promise for the acquiring industry is immense.