Hypercom Corp. has pulled more of the wraps off its recently accelerated smart card and electronic commerce strategies.
The Phoenix-based company, which is adding advanced payment options to its point of sale equipment line, outlined its Secure Electronic Transactions offerings last week. These are the systems its customers can use to handle credit card transactions according to the Internet payment protocol spearheaded by MasterCard and Visa.
With GlobeSet Inc., the company it has been working with on SET software, Hypercom participated in a separate alliance announcement with two other organizations. It also released a loyalty-point system for chip cards.
Revealed during the American Bankers Association Bank Card Conference in Long Beach, Calif., the moves are the latest in Hypercom's drive to prepare for a broader range of electronic payment options.
In contrast to its POS-oriented archrival Verifone Inc., which established an Internet commerce division two years ago, Hypercom took its time before moving in similar directions. While Verifone's approach attracted the attention of Hewlett-Packard Co., which acquired it this year for $1.3 billion, Hypercom asserted its independence and tighter focus on core transaction businesses.
Hypercom, reporting about $200 million of annual revenue versus Verifone's $500 million at the time of its purchase, announced an initial public stock offering Sept. 12.
George Wallner, chairman of Hypercom, said it takes an evolutionary view of customer requirements. The products announced last week carry the Pinnacle label, making them part of a client/server architecture that involves putting an "adaptation layer" on an existing host computer.
Mr. Wallner said there is a premature tendency to write off old but functional central computers, and Hypercom wants to avoid "bullying people" into unnecessarily radical overhauls. "Everybody underestimates the resiliency of legacy systems," he said in an interview during the ABA conference.
"We eliminate the risk factor in getting rid of the host," he added. "We view electronic commerce not in isolation, but as another means of delivery.
"We have been cautious about electronic commerce." The alliance with GlobeSet of Austin, Tex., offers "a low-risk and effective way to get into it."
The Hypercom SET products, based on the SET 1.0 standard around which GlobeSet and numerous other vendors are developing software, will consist of a PinnacleSET virtual wallet for cardholder computers; PinnacleSET POS for links among cardholders, merchants, and transaction processors; PinnacleSET Gateway for card authorizations; and PinnacleSET CA, a certificate authority server for digital identification.
Meanwhile, Hypercom joined with GlobeSet, Applied Communications Inc., and Compaq Computer Corp.'s Tandem Computers unit in promoting another standards-based approach to Internet shopping.
The four said they want to take the lead in adapting an international transaction messaging standard, known as ISO 8583, for routing and authorization of Internet transactions. They said the initiative will supplement SET, promote its interoperability, and stimulate electronic commerce in general by reducing the costs of custom interfaces to credit card authorization networks.
"An ISO 8583 interface will allow our Base24 point of sale customers to process transactions generated by merchant servers and SET technology just as they would a traditional POS transaction," said Dan Heimann, director of strategic marketing at Applied Communications of Omaha, a subsidiary of Transaction Systems Architects Inc.
"Because it is an open standard," he said, "use of ISO 8583 is not exclusive to ACI, GlobeSet, Hypercom, or Tandem. We have come together to prove its use as a tool to link existing systems and emerging electronic commerce technologies."
The companies are well interconnected. Applied Communications is a provider of Tandem-based transaction processing systems to many electronic funds transfer networks. Tandem is an investor in GlobeSet, a spinout of Bankers Trust New York Corp.'s BT Ventures subsidiary. GlobeSet has been an integral part of both Hypercom's and Tandem's SET-based strategies.
On the chip card front, Hypercom put its Pinnacle Loyalty Management System, or LMS, on the market. It is designed for multi-merchant loyalty and bonus point redemption programs like one being piloted in Taiwan by China Trust Commercial Bank, the retailer Hang Ten Enterprises Ltd., the smart card maker Gemplus Group, Hypercom, and Visa International.
Loyalty points are stored on Visa chip cards, which allow for account inquiries and instant redemptions. The LMS provides centralized control and tracking of program rules and point totals, while also accommodating credit, debit, and stored value payments.
Hypercom said LMS is the first such product developed with Visa's assistance. Visa senior vice president Gaylon Howe said it "exemplifies Visa's Partner Program," which encourages development by member banks and technology companies of smart card programs that are tailored to local market needs but within a global "open standards" framework defined by Visa.
