Processing Firms Join Forces to Promote Wireless Point of Sale Data

In the time it takes to spit out the latest technology abbreviation, merchants equipped with a cellular phone and computer modem could process a credit card transaction.

The technology for making that happen is cellular digital packet data - known as CDPD - and major companies in the transaction processing field are lining up to support it.

Hypercom Inc. of Phoenix, Verifone Inc. of Redwood City, Calif., and 20 to 30 others have announced the formation of a consortium to promote the technology for wireless transmission of point of sale information.

The consortium is called the Cellular Digital Packet Data Transaction Automation Special Interest Group, and its chief aims are technical standardization and the exchange of information about distribution and implementation.

"It opens up avenues for retailers to accept payments in non-traditional venues," said John Menzel, director of programs for Verifone and chairman of the group. "It could be the plumber who comes to your house, or the Domino's Pizza guy."

"With the proliferation of smart cards and debit cards, you are switching away from a device a clerk might use," Mr. Menzel added. "The consumer might interact directly with the device."

Vendors at the New York City Marathon last fall sold a record amount of merchandise, in part using U.S. Wireless Data Inc.'s POS-50 cellular card authorization terminals.

Mr. Menzel said digital packet transmissions can deliver a transaction authorization in four seconds and at a lower cost to merchants than in a typical dial-up transaction, which can take up to 30 seconds.

In addition, Mr. Menzel said if an error were made, the recovery time with CDPD is much less. With dial-up systems, the entire transmission would have to be repeated.

However, Paul Whittle, vice president of point of sale systems development at Hypercom, said there are no reliability or speed problems with current dial-up systems. He added that the cost difference between dial-up and cellular digital processing is minimal.

"We already deliver reliable and fast communications," said Mr. Whittle, who also is a member of the consortium. "The size of niche markets that must be mobile does not merit creating a whole new infrastructure for POS. Because the cost is competitive with dial-up, it makes sense to develop the infrastructure."

Nevertheless, Mr. Whittle said, Hypercom is "very excited about CDPD."

Nova Information Systems Inc.'s senior vice president for services, Steve Hughes, said CDPD systems' affordability for smaller merchants is an important reason to standardize.

"It allows these merchants to use real-time credit card authorizations, and it brings them up to the same level of safety and reliability that a regular retail establishment might have," he said.

Mr. Hughes said real-time authorizations would also help merchants reduce their costs by allowing them to qualify for the lowest processing fees from credit card companies.

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