TNS Hopes Its Dial-up-to-IP Converter Will Draw Cost-Conscious Merchants

With an estimated 11 million point-of-sale terminals still in place in the U.S. processing card transactions on dial-up connections, processors and merchants are seeking ways to convert these devices to broadband without taking on the costs of replacing them. The latest is Transaction Network Services Inc., a Reston, Va.-based company that specializes in routing POS and ATM traffic between terminals and processors. TNS last week introduced a product called FusionPoint Lite that allows dial-up payment devices to function on existing Internet Protocol (IP) links, presumably making for faster and less expensive transactions. “It's a turnkey product geared to taking a legacy product and making it function as state of the art,” says Alan Schwartz, executive vice president for North American Sales at TNS. The product comes at a time when many merchants are looking for ways to cut transaction costs and tender times. It also comes from a major player in the business of electronically ferrying transaction traffic to processing platforms. “TNS has a large market share,” says C. Marc Abbey, a partner at First Annapolis Consulting Inc., Linthicum, Md. “Having a company of the stature of TNS offering this is momentous.” Terminal-maker Hypercom Corp., which operates a competing transaction-transport service called HBNet, introduced a similar dial-up-to-IP conversion product in 2005 called the IN-tact 1201. Such products “are a good thing for merchants,” says Adil Moussa, an analyst at Aite Group LLC, a research firm based in Boston. “I can see the significance in terms of processing speed, but also in reducing [transaction] cost, as well.” TNS officials say “a few” unnamed customers in the U.S. and U.K. have been testing FusionPoint Lite. Schwartz won't make projections for the service, but says “overall feedback has been phenomenal.” The advantages of the product, he says, are that it allows merchants with IP connections in place to convert existing terminals while saving on transaction fees related to dial-up lines. The new service, which includes a so-called ConverterPoint box that merchants plug their terminals into with USB linkups and then plug into phone jacks, is also designed to be installed by lay employees at the store. “It's almost instantaneous,” Schwartz says, referring to the time it takes to get the service up and running. “It comes preconfigured and plug-and-play. If the guy has broadband already it's a layup.” The product, which also performs encryption of transaction data, costs up to $30 per month per terminal, with actual cost depending on the number of devices hooked up and the length of time the merchant commits to. The key to keeping costs down, says Schwartz, is self-installation. “If we had to send field reps out, that changes the whole value proposition,” he says. Schwartz adds TNS is aiming the new product at processors and other resellers as well as merchants. Still, with the cost of IP terminals coming down, merchants in some instances could be better off simply replacing their dial-up terminals with new IP-capable devices, says Aite's Moussa. While many merchants are loath to replace payment devices until they have been fully written off, some merchants may find it advantageous to buy new devices that not only offer IP links but also built-in compliance with the Payment Card Industry data-security standard (PCI), he notes.