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September 13th, 2006 by Jamie Estep

Technological Progression of Payment Processing – Not any time soon!!!

Filed in: Credit Card Equipment, Merchant Accounts | 3 comments

Old TechnologyIf you know much about payment processing or have paid attention to the credit card terminals that businesses use where you shop, you would quickly realize that technology in credit cards and processing equipment has barely changed in the last 20 years.

The first Verifone Zon series terminal was introduced by Verifone in 1983. Some of those terminals, manufactured in 1983 are still being used today. Most new terminals still use the same, relatively simple technology found in the original Zon terminals.

In an age where the average person can construct a near-super computer, why have we not adopted better technology into paying for merchandise?

Much like the military, credit card processing relies on reliability and consistency. However, many of the newer technologies that we see are very reliable. The older technologies are also more expensive to manufacture because they are outdated.

With this is mind, the major hold on advancing payment technologies lies in consumers. Payment processing is a 100% consumer driven industry. Merchant account providers, ISO’s, Processing Banks, and Credit Card Companies exist because businesses want an easy way to accept payments, but more importantly and ultimately the deciding factor: consumers want an easy way to pay.

Credit cards offer that simple, cheap, fast, and convenient method of paying for something. The new technologies that exist, smart cards and contact-less payments, which are intended to make paying even quicker and simpler, are great ideas but they share one fatal flaw hindering their widespread adoption.

These technologies are derived from the needs of large corporations and not consumers. How many consumers care if McDonald’s can save thirty million dollars per month if each person they serve can pay for their food 2 seconds quicker?

None…

Eventually these technologies will be pushed on to consumers, but it is definitely going to take time. There is great expense for businesses to adopt new systems and the act replacing a billion credit cards with something that costs 10 times as much is no desirable task for any bank.

Between smart cards and contact-less payments, I would place my bet on contact-less becoming the next thing for payment processing. But, it’s still not going to happen any time soon.

Related Posts:
The history of credit card terminals.

3 Responses to “Technological Progression of Payment Processing – Not any time soon!!!”

  1. John Conde September 13, 2006 at 12:21 pm

    One thing that I always found interesting was the financial issues Verifone had because they made their Zon and Tranz series terminals so well. They never broke so merchants never needed to upgrade. Fortunately the larger memory requirements of truncation and other security initiatives have caused some of these terminals obsolete. Otherwise, who knows when their end of life would be?

  2. Merrell September 17, 2006 at 4:44 am

    The processing of credit card transactions though PC cash registers seems to have had steady (though less than phenomenal) growth since the introduction of the various credit card software applications in the early 90s, and their adoption by the POS development channel. There did seem to be a recent lull in this progress while both industries tried to figure out what to do with IP, but now with the rapid increase in the percentage of retailers with pre-existing broadband internet connectivity I am seeing a resurgence – and opportunity – in the POS developers’ channel.

  3. salesstrategy September 28, 2006 at 9:44 pm

    The vendors and their employees support for older system initially as it difficult to adopt new technology so easily.

 

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