May 17, 2005
Wireless POS Tech Trims Retailers' Costs
By Evan Schuman, Ziff Davis Internet
Barb Seitz's craft business is doing well, but the owner of Barb's Custom Sewing needs to sells many of her products on the road, often at trade shows.
Today's wireless POS (point-of-sale) technology allows her to process orders in the field, but she has received an unexpected bonus: lower transaction fees because she rarely if ever needs to pay a "card not present" charge.
The typical retail technology arguments for wireless investments revolve around convenience, speed and efficiency.
But as retailers push the portable POS units well beyond the storefront—to delivery people, repair technicians and sales reps working shows—they also are finding it much easier to never pay the "away from a terminal" charge of which credit card companies are so fond.
The specific rates that retailers pay to credit card companies vary depending on the retail establishment's size, the credit card and many other variables.
But typical direct-connection rates are about 2.1 percent, compared with a 2.5 percent for "card-not-present" and as much as 4 percent if the merchant has to phone in the charge, said Donald Brown, a product manager in the wireless group at Moneris Solutions Inc., a wireless POS vendor.
"There are cost justifications that can be made from several different standpoints," Brown said, citing a restaurant's ability to theoretically reduce the time between a customer giving a credit card for payment and when the customer is able to leave.
"It can take about seven minutes from when you ask for your check and when you get it," Brown said. "If you're saving about seven minutes per table, you can probably fit in more tables per server per night."
The favorite wireless argument for credit card companies, though, is the potential for fraud reduction, as Seitz has discovered.
When she is selling at a show, most customers are strangers. Before she went wireless, she would take card imprints and run them through at her store the next day. "When I took the card imprint and gave them the merchandise, I had no idea if it was a good card or not," she said.
Before she switched to wireless, one recent customer had a bad card and stiffed her for about $100, she said. If she had been able to run it through wirelessly, she would have learned of the problem before surrendering the merchandise, she said.
Seitz said she also appreciates the long battery life of most of today's wireless units, allowing her to work in environments where an AC connection is not always available.
The downside? She has to hope that her booth space is able to receive the wireless signal.