T3 Picks Up The Pace Of Credit Card Transactions
By Midwest Tech Journal Staff
Step into your quick-service restaurant, hardware store, or convenience store for what you think will be a brief stop and you may find yourself in line behind three or four other people. Often, when you get to the front of the line, you realize that what is causing the delay is the 20-30 seconds that each customer has to wait to get a credit card authorization. Despite rapid advances in communication technologies, there is still a major bottleneck to faster transaction cycle times. It results from the vast majority of small and medium-sized merchants still authorizing credit and debit card transactions over dial-up modem connections, many of which communicate at speeds as slow as 1200 baud.
St. Louis-based Transaction Transport Technologies, LLC, or “T3” is looking to eliminate this bottleneck by allowing merchants to use low cost broadband communications technology to send (“transport”) the transaction. Currently, the only material faster alternative to dial is frame-relay technology, which many of the largest merchants utilize. But these connections and the infrastructure management issues that go along with them are costly. The mid-tier and specialty retailers have the need for speed, but even chains with hundreds of locations cannot justify the cost of deploying and maintaining those types of networks. As a result, two-second authorizations have typically been beyond the reach of merchants smaller than Wal-Mart or Home Depot.
T3 enables merchants to send their card payment transactions over broadband internet connections protected by a virtual private network (VPN), using IPsec with Triple DES encryption, or the new Advanced Encryption Standard (AES). DSL can provide a merchant with high-speed data connectivity and traditional voice service through a single channel. “Anyone who can afford a DSL connection to their business can now achieve the same 2-second authorizations as Wal-Mart,” said T3’s CEO Bob Varner. “The broadband market is changing rapidly, and in many markets DSL pricing has declined to levels where you can have the speed and versatility of DSL at essentially the same cost as a traditional dial-up line.” Additionally, Varner points out, broadband cable modem service is becoming more widely available to merchants and can provide the same benefits. “The competition in the market is lining up just right to benefit merchant, just as it has for consumers.”
From the merchant’s standpoint, the connectivity decision may sound simple or even obvious. But there were some hurdles for T3 to overcome. “One of the biggest issues we face is the myriad of different hardware and software devices in the field today that process credit cards, most of which operate using that slow and outdated dial technology,” said Jeff Kirk, the firm’s Chief Technology Officer. Since merchants often own their own terminals and don’t want to change, T3 knew that supporting all these devices was critical to its business model. “So we developed a true open-standard, plug-and-play solution where we can get almost any system out there online in just a few minutes,” according to Kirk.
T3 was also committed to establishing the highest possible standard for security. Rather than simply adopting earlier technology, such as Secure Sockets layer (SSL), which is utilized by many internet-based retailers, the company predominantly supports VPN/IPSec encryption standards. “We are flexible and can support SSL” Kirk points out, “but feel that the more robust, and more widely adopted VPN/IPSec technology is superior.” T3 believes the VPN firewall solution is more appropriate because it protects the transaction not only while in-transit, but also protects the merchants’ network and any information resident on the network. Industry experts agree: “It’s not enough just to encrypt the traffic, the endpoints also need to be protected, too,” according to Phil Swiderski of Checkpoint, a leading VPN solution provider. “Because the T3 solution incorporates a true Stateful Inspection firewall, customers are protected from a variety of malicious hacker attacks.”
T3’s first customer was Wild Birds Marketplace of Manchester, MO. Owner-operator Doyle Banks was frustrated with slow transaction times and was receptive to the T3 concept. “(The T3 solution) cut credit card processing time by at least 65 percent,” according to Banks. The additional customer throughput that is possible with this increase in speed improves store revenue, lowers average transaction costs, and makes the customers shopping experience more enjoyable.
Some merchants will even be able to simultaneously get faster transactions and save money with the T3 service.
Many can eliminate redundant telephone lines; others can renegotiate processing charges with their merchant bank. “One chain store we’re in discussions with estimated they could save over $150,000 per year by moving to a secure broadband-based T3 solution,” says Dennis Brouwer, SVP of Marketing for SmartPipes. “We have customers today saving 30% to 50% annually and potential synergies of that magnitude with many of our prospective customers.” SmartPipes is the leading network security software and managed services company headquartered in Dublin, OH.
It is not surprising that, leaders in both the credit card and broadband provider industries have been quick to take notice. MasterCard International recently invited T3 to join their Preferred Vendor Program, a consortium of 110 vendors worldwide. The program facilitates cooperation among MasterCard’s partners to improve global strategy and product development. “Anything that will drive increased adoption of credit card use at the point-of-sale is a win-win situation for both MasterCard and the merchant,” according to Varner.
DSL resellers are excited by the concept as well, believing that it will drive increased adoption of business DSL, and expand utilization of value-added services for businesses that already have DSL. Speakeasy, the nation’s largest independent broadband service provider, is offering a co-branded product with T3. “T3 provides merchants with easy and affordable access to a payment authorization experience that effectively combines the critical elements of speed, security, and reliability,” said Mike Apgar, CEO of Speakeasy.
For a merchant who already has DSL for other reasons such as internet access, inventory management, or even Voice-over-IP, T3 is an easy choice, according to Kirk. “This is just one more application that merchants can run over their existing DSL and it provides the opportunity to eliminate charges for one or more dial-up lines.”
T3 has been fine-tuning and testing their technology with card processors for the last several months, including field tests with various merchants. Now the company is rolling its services out to merchants nationwide, both directly and in tandem with strategic alliance partners.
“We’re beginning to break-out big time,” says an optimistic Varner. “T3 directly addresses the overwhelming need for faster cycle times on the ever increasing volume of credit card payments. We are also positioned to benefit from the worldwide rollout of broadband services. We are truly a faster, better, and cheaper solution.”
Maybe next time the line at your local merchant won’t be quite so long.
|
What do you think?
Share your comments about this article below.
| |
| Article Rating |  |
Average Score: 5
Votes: 5
|
|
