Authorize.net Sets Its Sights on Brick-and-Mortar Merchants

Authorize.net Inc., which serves as a payments gateway for 91,000 mostly mid-size and small Web-based merchants, is making a major play for the brick-and-mortar point of sale. With the backing of its new owner, Burlington, Mass.-based Lightbridge Inc., Authorize.net is revving up its marketing and re-seller efforts to expand rapidly beyond the approximately 200 merchants it serves currently for so-called card-present transactions. The Amercian Fork, Utah-based company refuses to project transaction volumes for its new initiative, but David S. Schwartz, marketing director, says that since card-present transactions are so much more numerous than Web and mail-order payments, capturing even a fraction of a percent of the market could positively affect Authorize.net's bottom line. Authorize.net processes electronic checks on the automated clearing house as well as card transactions. Capitalizing on its eight years of experience in Internet Protocol (IP) connectivity, Authorize.net plans to make headway in the brick-and-mortar merchant business by offering the efficiencies and faster tender times of always-on, IP connections. To that end, the company announced at the Electronic Transactions Association's annual meeting and expo, held this week in Las Vegas, that it had forged an agreement with terminal maker Hypercom Corp. in which Authorize.net's gateway will be offered to retailers buying Hypercom's Optimum T4100, a new device with IP capability. Besides ramping up marketing efforts in the card-present market, Authorize.net is also forming partnerships with technology companies offering applications for specialized merchant niches. One example is Pocket Cheff, a company based in Miami and Sao Paulo that allows restaurants to equip their wait staff with PDAs that can process both orders and payments tableside, relying on Wi-Fi connections. Pocket Cheff has signed up five restaurants so far for the new service. Lightbridge paid $82 million to acquire Authorize.net in a deal announced last month. InfoSpace Inc., Bellevue, Wash., had owned the company since 2000, but wanted to concentrate on its online directory and search businesses. Lightbridge, a supplier of anti-fraud technology to the wireless telecom industry, plans to use Authorize.net to help it expand into payments services for both Internet and physical merchants, relying especially on the recent wave of interest in IP connectivity at the point of sale.