Dean M. Leavitt wants to make his company the "Ma Bell" of wireless payment processing.
Since taking over in May as chairman and chief executive officer of U.S. Wireless Data Inc., Mr. Leavitt has been reinventing what was once a wireless-device maker as what he calls a "technology blender" or "translator."
"We offer access to front-end processors and terminals that otherwise don't talk to each other," Mr. Leavitt said. "Nobody else is doing this in the wireless [payments] arena."
U.S. Wireless, which has continually struggled financially, has shed two unsuccessful identities since its start in 1991. Originally a maker of remote terminals for accepting credit cards, it lacked the broad certifications needed to compete in the card processing world.
In the mid-1990s it sought to build recurring revenues as a seller of terminals and processing services. That also did not meet expectations.
Now selling the last of its merchant-acquiring portfolios, the Emeryville, Calif., company is trying to secure its niche as a "neutral enabler." It did not want to compete with terminal providers, acquirers, or independent sales organizations - the transaction-processing sales agents known as ISOs. Its new direction revolves around Wireless Express Payment Services, or WEPS, a proprietary "middleware host" that serves as a "funnel" for wireless transactions.
"We allow the transaction to come into us in a variety of different formats, different protocols, and different message formats, and send it out to the processor in the way that they need to get it," Mr. Leavitt said. "We have created a standard for the wireless industry."
Mr. Leavitt, 40, took the helm of U.S. Wireless after Roger Peirce, a former Visa International and First Data Corp. executive, resigned in March. Mr. Peirce had held the post less than a year and left for personal reasons, according to company officials.
Mr. Leavitt, no stranger to the merchant services world, was previously president of U.S. Data Capture Inc. of Greenwich, Conn., a merchant ISO he founded in 1991. Excited by the possibilities of wireless communications, he said, "I really felt that this was something I could take to the next level."
Unlike the conventional and highly standardized world of dial-up terminals, the wireless transport market is disjointed and complex and poses new challenges for the payments industry. Mr. Leavitt envisions WEPS as the equivalent of a "wall plug" for the wireless part of the payment industry.
WEPS uses the CDPD - cellular digital packet data - standard and American Mobile Satellite's ARDIS data transmission system. It plans to incorporate Mobitex - owned and operated by BellSouth Corp. - as well as satellite technology. U.S. Wireless has aligned with primary CDPD carriers such as AT&T Wireless, GTE, Bell Atlantic Mobile, and Ameritech.
Agnostic when it comes to device makers, merchant-acquirers, and processors, U.S. Wireless wants to form as many alliances as possible. It has agreements with ISOs, acquirers, and transaction processors such as Cardservice International Inc., Chase Merchant Services, Westamerica Bank, and Paymentech.
Equipment makers such as Hypercom Corp., Lipman U.S.A. Inc., and Intellect have endorsed WEPS. Deals with sizable processors such as Vital Processing Services, National Data Corp., and Concord EFS Inc. are in the works, Mr. Leavitt said.
"We have been successful in signing over 30 WEPS agreements," he said, calling that "an obvious validation that what we're doing is very much wanted in the marketplace."
U.S. Wireless, which is undergoing a recapitalization, is also offering a set of Internet tools intended to make it simple for acquirers to set up and monitor their merchants. An acquirer can activate and deactivate terminals and pull up real-time reports on a laptop, for example.
U.S. Wireless "carved out a rather unique niche for themselves, and it's, frankly, one that was sorely needed," said George E. Devitt, senior vice president of global marketing for Hypercom Corp. in Phoenix.
WEPS enables merchants to exploit wireless technology more easily and saves Hypercom work and time, Mr. Devitt said. "If Vital wanted to accept transactions from four different wireless technologies, they would have to make changes to their host four times, and we would have to make changes to the terminal application four times," he said. U.S. Wireless makes it "transparent to the processor and the terminal vendor. It's sort of like Oz behind the curtain."
Chuck Burtzloff, president and CEO of Cardservice International Inc., an Agoura Hills, Calif.-based ISO, said his company has supported U.S. Wireless in good times and bad. "Finally, they've got their act together with this WEPS," he said.
No one else is serving in the much-needed role of "traffic cop" for wireless card payments, said Caesar Berger, senior vice president of product development at Cardservice. For example, though First Data, which processes for Cardservice, cannot connect a merchant to a CDPD network, WEPS enables Cardservice to offer CDPD to its merchants. "They're resolving the problem of connectivity," Mr. Berger said.
In the past, the high entry costs, bulky equipment, and unreliable connections worked against remote payment devices. With general technological improvements and the declining prices of wireless modems, wireless costs are converging with those of wireline.
A wireless payment terminal five years ago may have cost $2,500, compared with $750 now, Mr. Leavitt said. With WEPS, the cost of a transaction is 5 cents, one-tenth what it was five years ago. A wireless transaction can be completed in three to five seconds, versus 12 to 15 seconds for a conventional one.
Mr. Leavitt said a number of new markets are ripe for wireless payment acceptance. The fast-food industry is among the primary targets, particularly as dinner for a family of four reaches into the $20 to $30 range. "You now have a consumer groundswell telling the fast-food market that they want to use credit cards," Mr. Leavitt said.
U.S. Wireless has completed a test with Domino's Pizza and has others under way with Burger King and Papa John's Pizza. Last summer it formed a marketing alliance with Visa, AT&T Wireless, and Westamerica Bank to go after fast-food clients. Mr. Leavitt is also making forays into the transportation and package-delivery industries and sports venues.
Mr. Leavitt said he expects that as conventional terminals age and must be replaced, buyers will turn to wireless terminals.
"In five to seven years, there is really going to be no need to have a wired point of sale device anymore," he said. "We envision them all being wireless."
