Blackstone Merchant Services LLC, a Miami-based ISO, has developed point-of-sale terminal software for Apple Inc.'s iPhone that enables the device to capture signatures.

Generally, signature-based transactions are less costly for merchants than card-not-present transactions. Software for the iPhone also typically is less costly for merchants to purchase than a dedicated wireless POS terminal.

With Blackstone's application, Cardholders use a finger to sign the receipt, which the company then e-mails to them. The software sells for $19.99 through Apple's iTunes store. It also can be used on compatible iPod Touch devices via a WiFi connection.

Merchants do not have to have a Blackstone merchant account to use the application, but they must have an account with Authorize.Net, an online payment gateway owned by CyberSource Corp. Though Blackstone would not release the merchant discount rate for transactions made with the software, it says the cost is "equivalent to Internet-based transactions." Wells Fargo Merchant Processing, a unit of Wells Fargo & Co., lists a discount rate of 2.4% of the sale for online credit card transactions. Discount rates include interchange and processor fees.

The software uses address-verification services and card verification value codes found on payment cards as further security measures, says Janet Sancho, Blackstone senior vice president of sales. When a merchant uses address verification and gets the CVV code, the transaction rate can be reduced.

The signature-capture function can help merchants counter charge-backs, Sancho says. "A signatureless transaction leaves a merchant exposed to possible charge-backs for up to six months after a transaction," Sancho says.

"Merchants must present a copy of the signed receipt to easily dispute these charge-backs to avoid losses. Most Internet-based transactions do not allow for the possibility of obtaining a signature," she says.

The software, called Billing: Credit Card Terminal, also takes advantage of the iPhone's built-in global positioning system chip to log the location and time of each sale.

The software has a built-in demonstration mode that previews all of the functions, Sancho says.

Blackstone's agents will get a commission on the application sale and collect recurring revenue from transactions made with the software, Sancho says.

The Blackstone iPhone software joins a growing field of ISOs and software developers looking to capitalize on success of the smart phone and capture new merchants who otherwise would not buy a point-of-sale terminal.

A search on iTunes found 10 iPhone POS-terminal applications with prices ranging from free to $49.99. Merchants could be attracted to use these apps, assuming they buy an iPhone or iPod touch. The cheapest iPhone is $99 from AT&T if one is a new customer or $299 at retail.

By comparison, a wireless-enabled POS terminal often sells for more. A recent e-mail flyer from Tasq Technology, a Rocklin, Calif.-based POS equipment distributor, advertised a Vx610 terminal made by VeriFone Holdings Inc. for $525 that uses the same telecommunication technology as the iPhone.

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