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This article appears in the Oct. 8, 2009, edition of ISO&Agent Weekly.
Downloadable card-acceptance applications for handheld mobile devices such as Apple Inc.'s iPhone are growing in number, yet point-of-sale equipment manufacturers generally agree that the apps are unlikely to diminish their business.
Some merchants may be attracted to card-acceptance apps because they typically cost less than a wireless-enabled POS terminal. A search on Apple's iTunes online store found eight iPhone POS terminal applications with prices ranging from free to $49.99. The least expensive iPhone is $99 from AT&T or $299 at retail.
By comparison, a recent e-mail flyer from Tasq Technology, a Rocklin, Calif.-based POS equipment distributor, advertised a Vx610 wireless terminal made by VeriFone Holdings Inc. for $525.
Instead of squelching terminal-equipment sales, the applications may "wind up expanding the card-acceptance base rather than pirating the traditional merchant space" because they may entice some small merchants to accept card payments in addition to cash and checks, says Chris Justice, president of North America at France-based Ingenico S.A. "It's not a cannibalization of existing products," Justice says.
Ingenico has plans to launch its own smart phone card-acceptance application, says Justice, declining to discuss any details of the product or when it may be available.
There are large amounts of transactions in the payments stream, and there is room to broaden the technology available to merchants. However, it is unlikely that a smart phone intended for consumer use will replace "something that is retail hardened," says Justice.
The emergence of technologies such as smart phone card-acceptance applications likely will bolster sales of traditional wireless POS equipment, says Tim McWeeney, vice president of North American sales at Way Systems Inc., a Woburn, Mass.-based mobile-terminal maker. "I believe long-term equipment sales will rise because of mobile apps" because merchants eventually will require additional terminal features, such as PIN-debit capabilities, for their mobile businesses, he says.
Security A Consideration
The security level of smart phones and card-acceptance applications also is a consideration when discussing their growth in the market, notes Stuart Taylor, vice president of global solutions and marketing at Scottsdale, Ariz.-based Hypercom Corp.
Card-acceptance applications are not a competitive concern for terminal makers because none of the consumer mobile devices are designed to meet Payment Card Industry data-security standards, Taylor says.
"While there is a market for non-PIN/credit-only transactions or card-not-present transactions for those merchants that want to use their existing [personal digital assistant] or smart phone for credit card payments, the mainstream market continues to be build-for-purpose PCI-PED/EMV-certified mobile point-of-sale terminals that adhere to the strict PCI requirements for payment-transaction security," Taylor says.
PCI-PED regulations govern PIN-entry devices and maintain PIN-transaction security, while EMV is a global standard for credit and debit payment cards based on chip technology.
Hypercom declined to comment on any plans the company has to develop a card-acceptance application.
Smart phones "aren't built with the security standards of the typical POS terminal," agrees Justice. "What is the ability for someone to open the case, put in a device and put that phone back into circulation so that transactions can be skimmed or breached?" he asks.
Ensuring that data remain safe during transactions between consumers and merchants using a card-acceptance application is a high priority for Ingenico as it develops its own app, says Justice. "We won't roll anything out that we don't feel is" incredibly secure, he says.
POS terminal maker VeriFone Holdings Inc. declined to comment for this article.
