With Microsoft and H-P, First Data Plugs Into PC-Based Payments

The concept of point-of-sale electronic payments without a standalone card reader took another step forward this week when leading processor First Data Corp. introduced a new personal computer-based service called First Data POS Value Exchange. Aimed mostly at single-location merchants with up to five checkout lanes, the service uses hardware from Hewlett-Packard Co. and upgraded POS processing software from Microsoft Corp. First Data's announcement follows by only four days the disclosure by POS terminal and software manufacturer Hypercom Corp. that it had acquired Redmond, Wash.-based TPI Software LLC, a maker of PC-based payment software (Digital Transactions News, Jan. 11). First Data started testing POS Value Exchange with merchants in the second half of last year and expects to roll it out this quarter through its many sales and distribution channels, including independent sales organizations and merchant alliances with banks. According to Barry McCarthy, president of product innovation at First Data Commercial Services, the new service enables small merchants to replace low-end electronic cash registers and POS terminals with higher-functioning hardware and software that offers inventory management, accounting, and other abilities while taking up less space. “That was, until today, only available to merchants that had an IT department,” he told Digital Transactions News this morning on a call from the National Retail Federation's 96th Annual Convention & Expo in New York City, where First Data was demonstrating the service. “For the first time, a small merchant at an affordable price can have all of that functionality.” Components of POS Value Exchange include H-P's rp5000 PC for retailers, which comes with a 15-inch touch-screen, cash drawer, bar-code scanner, thermal printer, and PIN pad. The PC is preloaded with Microsoft Dynamics Point of Sale 2.0, an upgraded version of an application Microsoft introduced in 2005. First Data processing is part of the package and includes credit card, signature- and PIN-based debit card, gift card, and check processing. McCarthy refuses to talk about pricing, but says the package will cost merchants less than if they were to buy the components separately. First Data could have a big sales job on its hands with POS Value Exchange, according to processing consulting Paul R. Martaus of Martaus & Associates, Mountain Home, Ark. Martaus estimates well under 1% of 4 million-plus card-accepting small U.S. merchants use PC-based payment systems. The reasons, he says, include inertia, satisfaction with existing POS equipment, and fear of computer problems and software crashes. “The point of sale terminal?they know it, it's what they understand,” he says. But analyst Gwenn Bézard, research director at Boston-based Aite Group LLC, sees the First Data-HP-Microsoft offering as “a very significant one in terms of where the industry is headed.” That is, to break out from the pack. “Merchant-acquiring processing is a commodity,” he says. “A number of merchant acquirers are trying to add value to the basic processing business.” Other efforts along this line, he adds, include new offerings by eBay Inc.'s PayPal payment service for small merchants, Google Inc.'s integration of merchant processing with online marketing, and financial-software maker Intuit Inc.'s efforts to integrate its QuickBooks application for small business with online banking and merchant processing. Intuit is doing that through its pending acquisition of Digital Insight Corp. and other moves, says Bézard.