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The movement of credit card transactions to the web is so new that the volume is hardly measurable. “This is less than a year old, so the concept is going through the proof right now,” Arnold says.
The primary market for web-based POS so far has been small to mid-sized merchants, says Michael Cottrell, senior vice president of alliance partners and strategy for Vital, a payment processing company owned by Total System Services Inc. and Visa. “Small retailers can eliminate the $40 they may be paying a month for a dedicated line and send everything over the Internet,” Cottrell says.
The largest retailers, with many big stores, may not want to entrust their transactions yet to the Internet, he says, preferring to rely on dedicated lines to minimize the risk of disruptions that are possible over a public network. “If you have 500 or 1,000 stores and you have to go back to dial-up for an hour, it could create a huge problem.”
Understanding the concept
Concord EFS, a payments processor, began testing web-based credit card data transmission last year and rolled the service out to merchants last November. Only in January at the National Retail Federation annual convention did it start widescale marketing. Only several hundred retail locations are sending transactions over the Internet, Arnold says.
But just as the web has moved into and changed practically every other area of retailing, it’s a safe bet, analysts say, that it won’t take long for the web to become a major data network for payments. “Retailers understand the concept right away,” Arnold says. “I firmly believe the Internet will become a major network for credit card processing.”