The New Value in POS
Program Access Platforms
The availability of new technologies and the ubiquitous power of the Internet are transforming POS terminals. They are becoming more sophisticated information delivery and program access platforms for consumers and merchants. These new screen-based Internet-enabled POS devices also offer merchants, independent sales organizations (ISOs), and processors new sources of revenue. The new generation of terminals will bring increased automation to the store, improving merchant profitability and customer service.
Hypercom developed this advanced generation of terminals with the ICE (Interactive Consumer Environment) platform. ICE offers the convenience of touch screen terminals that customers can activate. The terminals provide Internet-enabled software services that deliver new applications and functions to merchants and consumers alike. The new system is called ePOS-infocommerce (ePic). ePic can help generate new revenues and create more profit potential for users of POS technology. It also has the potential to become a platform for future services and cost-effective support for smart cards.
Customer-activated transaction terminals are the emerging trend in payment processing. Factors that are driving this trend include smart cards with stored value and debit, advanced in-store advertising, loyalty and electronic coupon programs. Additionally, consumers are increasingly reluctant to give their cards to a cashier or waiter. This trend is a catalyst in creating a new generation of consumer interface devices, what Hypercom calls ICE.
With this new generation, the PIN pad is replaced by a touch screen terminal that faces the customer. In addition to traditional financial transactions, the terminal supports many new customer-activated applications. Cashiers enter data through the cash register, a cashier data entry pad, or by turning the terminal around to face the consumer or cashier, as appropriate. The new generation of Hypercom consumer interface devices supports more applications that add value at the point of sale. They will encompass many more services beyond traditional POS, and they will use the power of the Internet to accomplish this.
The new technologies that transform POS terminals into consumer interface devices and program access platforms will also provide potential new sources of revenue for merchants, ISOs, and processors. The new generation of terminals will improve retail automation, reduce merchant chargebacks, and support sophisticated advertising, loyalty, and coupon programs. The terminals will also provide a system for e-mail at the point of sale and enable merchants to sell products through the World Wide Web.
Electronic Receipt Capture
With the new generation of interface devices, Internet-enabled electronic receipt capture (ERC) for merchants, processors, and banks will be in real-time via the Internet. Electronic receipt capture is important because it reduces merchant chargebacks for disputed transactions, and it is the last step in automating the card acceptance process. ERC also eliminates paper receipt handling, storage, and retrieval by the merchant or processor.
Receipt capture through the Internet provides the processor, merchant, and customer with a real-time response for this value-added service. Charge-back handling is automated by using electronic data interchange (EDI) to send receipt images to VISA or MasterCard for verification. The response documentation is sent through the Internet to the merchant, viewed with a standard browser, and printed or e-mailed to the customer. Electronic receipts allow direct input into customer personal accounting packages or automated corporate accounts. The Internet is a fast, accurate,and viable medium for electronic receipt distribution and charge-back reconciliation.
Advertising, Loyalty Programs, and Electronic Coupons
An increasing number of companies distribute sophisticated interactive advertising, loyalty, and coupon programs over the Internet. These companies are looking for outlets for their content and the point of sale represents a high-value outlet.
Internet advertising will move to the point of sale terminal. The new generation of consumer interface devices will be highly visible and will deliver a targeted message to a captive audience. A graphics screen that faces the consumer is an excellent medium to display advertising, loyalty programs, and electronic coupons. By interacting directly with the payment device, the consumer is captive and focused, and much more likely to retain the advertising message.
The point of sale terminal also represents a valuable advertising medium for products or services because of its visibility and its ability to target a specific consumer audience. For example, a consumer in a golfing supplies store is most likely to be a golfer and receptive to focused promotions. This consumer may ignore or become annoyed by a detergent advertisement, but will be more interested in one that introduces a new set of golf clubs. Targeted programs at the point of sale represent sohisticated niche marketing and are more valuable and effective than broadcast advertisements.
ePic provides connectivity for ICE terminals via the Internet to companies that want to advertise through this medium. It brings opportunities for the merchant to participate in loyalty and coupon programs and to receive revenues from the delivery of these programs.
ePic supports Internet-originated e-mail via the transaction terminal. Processors, banks, and retail offices can send e-mail to merchants to inform them of new programs or new procedures. The interchange through the POS device will be two-way so customers can make appointments or request merchandise availability and prices. Merchants can send e-mail to processor support desks and to banks and respond to questions from customers or suppliers. Merchant offices can instruct clerks about new merchandise, and suppliers can inform merchants of deliveries.
The new interface devices will enable customers to receive and to send e-mail at the point of sale. Perhaps even more radical is that the devices will enable even the smallest merchants to sell products through the Internet. Electronic commerce allows products and services to be viewed, promoted, and sold via the World Wide Web. Some research firms estimate that, within the next five years, 30% of all retail purchases will be made via the Web. E-commerce enables merchants to expand their customer base at a very low cost. Selling through the Internet is the most cost-effective alternative to physical expansion for merchants of all sizes. Small merchants may benefit even more from-commerce than large national retailers. Small- and mid-sized merchants can exceed the limitations of their geographical coverage and increase sales dramatically by selling to a larger, global market on the Internet.
The Internet-enabled capabilities of ePic and ICE have merged the real and virtual worlds of business by providing software that facilitates the set-up of a virtual storefront. With a virtual presence established, the ICE terminal provides access to the Web storefront and supports the functions needed to complete sales and other communications via the Internet. The merchant can pick up orders, verify transaction approvals, arrange shipments of merchandise, notify customers of shipments, and respond to simple inquiries. These Web site management capabilities can be accomplished using the Hypercom POS terminal instead of a computer for Internet access.
Merchants with online stores can use Hypercom POS terminals to link their physical and virtual stores. Receipts printed by the ICE transaction terminal at the real, physical store can advertise the Web address or offer credits for customers to redeem when shopping on the Web. In turn, a visit to their virtual store on the Internet can promote a visit to the real, physical store with promotions or loyalty programs. With ePic and the ICE platform, the merchant's physical and virtual stores can be linked and mutually supportive.
Merchants with online stores can use Hypercom POS terminals to link their physical and virtual stores. Receipts printed by the ICE transaction terminal at the real physical store can advertise the Web address or offer credits to customers that can be redeemed when shopping on the Web. In turn, a visit to a virtual store on the Internet can promote a visit to the physical store with promotions or loyalty programs. With ePic and the ICE platform, the merchant's physical and virtual stores can be linked and mutually supportive.
Security and Terminal Architecture
Card payment terminals today occupy a legitimate place on the merchant counter. That place is legitimized by the need for a secure, certified, and trusted device to handle payments. Security covers three areas: PIN security for debit, terminal software security (trusted software), and software certification. Electronic receipt capture also has its own security requirements. Recently, as transactions are increasingly sent over the Internet, message encryption has become a new and additional security requirement.
The various security requirements are met through a combination of hardware and software features. Hardware security is provided through tamper-resistant construction and intrusion detectors. Hardware security features are provided to protect encryption keys, prevent the introduction of monitoring bugs into the terminal, and contribute to the protection of software integrity. Software security is provided by a set of encryption and authentication techniques that prevent the loading of unauthorized software into the terminal.
An Internet-based interactive information device needs Web compatibility. It must be open and able to support any application running on a Web server that it is authorized to access. Two seemingly contradictory requirements for good financial transaction security and open Web capability are met in the ICE through a unique hybrid architecture.
The ICE is built on a dual-software architecture. Embedded applications software and a dedicated security processor control financial transactions and security. A separate browser emulator supports Web applications. A firewall separates the embedded transaction software and the browser emulator. Furthermore, a separate physical keypad is provided for PIN entry. The keypad is connected securely to the security processor, and it is not accessible to the browser emulator.
The security software supervises the browser emulator. This software provides server authentication and ensures that an unauthorized server cannot take control of the browser. The security software also limits the contents of screens to three active buttons at any time to prevent an unauthorized server from getting cardholders to enter their PINs into a downloaded fake PIN pad screen.
Card payments through transaction terminals remain a critical application,
and they require specialized and secure payment devices that will continue
to occupy a place on the merchant countertop. But the trend is toward
cardholder-activated transactions. There is also an increased demand for
electronic receipt capture. Additionally, the Internet has generated more
e-commerce opportunities for advertising and loyalty programs. All of these
demands have created the need for point of sale terminals to do more than
just process payments with cards.