You’ve seen it, the jumble of wires behind the POS terminal at a convenience store. Wires everywhere, connecting phones, faxes and terminals to phone lines. But, a new technology is here that can revolutionize the way POS is connected. You may soon be able to say ‘good-bye’ to the techno-spaghetti growing on your retail counter.

In the June 2008 issue of The Prepaid Press, Professor Retske, in Prepaid 101, provided an overview of POSA terminals and some of their basic features and benefits to the distributor, retailer and consumer. There have been a wide variety of terminals and solutions since the POS idea was launched, to eliminate shipping, inventory and pilferage issues associated with prepaid calling cards.



POSA Terminal Strategies

Today, most big box stores and national chains use brightly colored, well-designed individual cards that are adhered to advertisements that hang on a peg hook type display in stores. Of course, these cards are not active; that would be like hanging money out in the open. They are there to attract the attention of consumers, who will, hopefully, take them to the cashier to be paid for and activated.

There are different strategies on activating cards. Some POS providers store PINs in the POS terminal and print them to a paper receipt printer when purchased. Others retrieve a PIN from a server on activation, and print the PIN and other information onto the card with an attached thermal card printer. Thermal card printers usually utilize a preprinted stock that has a colorful all-encompassing design on one side and a blank thermal area, capable of accepting the printed information, on the other.

Some early POS solutions providers have tried to offer proprietary hardware as their entry in the terminal derby.  Today, most companies have abandoned the idea of building their own POS terminal hardware and have focused instead on developing software that will run on existing credit card authorization terminals.

A handful of companies are offering PC, Web-based solutions for POS and related services. Some of these are proprietary PC hardware; others are full blown countertop, wall mounted or floor standing kiosks. They may have touch screen interfaces or just a keyboard and a mouse.

Enter the PC

Internet based interfaces now have the capability to push new products and content to the POS system instead of having to be pre-loaded. These computer based systems are being widely accepted by retailers and distributors because of their flexibility and ease of use. A PC based system that can run new applications is almost the same price as a new three line POS terminal, but offers additional connectivity, access to powerful applications, and greater dynamics.

There have been some providers with an open attitude towards related services, and have invited credit card processors, check clearance companies, and handset activation programs and providers to co-exist on their terminal hardware. Others have doggedly fought off interaction with other providers and control each and every transaction that occurs.

POS systems that activate an account for a specific card are called Point Of Sale Activation (POSA). Given the different approaches now available, a new term needs be created that covers all types of POS activation - Electronic Point Of Sale (E-POS).



Connection Issues

Our new E-POS devices still have a need to connect to the network, just as with any POS terminal.

We have all been in locations that have a single phone line that is daisy chained to what seems like a thousand different interfaces. The line comes in, goes to the store’s phone, fax, payphone, credit card terminal, POS interface and ATM. It seems cords are strung all over the store and the proprietor seems to be constantly plugging and unplugging the cord from various devices to complete different tasks.

Back in the dark ages of prepaid, most terminals utilized Plain Old Telephone Service (POTS) to connect their terminals to the host. Dial up networking was a painfully slow process to wait through while the modems did their “handshake” and opened the circuit so the terminal could “talk” to the host. There were some refinements that helped expedite the process, which led to a wider acceptance of terminals.

As terminals gained acceptance, the connections became faster, and the PC based models began to pop up around the industry. It seems that once one company had success with the PC based models, competitors tried to cash in. Eventually broadband Internet Protocol (IP) connections to E-POS systems were introduced.

Broadband is essentially an “always-on” connection, eliminating the need to wait for a modem to encode and decode your digital information to transfer it over an analog circuit. IP is also digital, as opposed to analog, so there is no need for translation of the data. The faster connection speed adds reliability, error checking and other benefits related to financial transactions.

Just as the PC based models were coming out, manufacturers were releasing POS terminals that could connect over a cellular network. Cellular networks are now moving up to 3G technology, providing multiple protocols that terminals can use to connect. Other new technologies are on the horizon. Wi-Max will support a nationwide high-speed mesh network that almost any device can connect to, and send and receive high-speed data with no wires.



Advantages of E-POS

All this technology over the last decade has allowed E-POS to grow tremendously, and these systems have truly evolved in the last few years. E-POS systems are often highly sophisticated, being integrated with back office merchandising, planning, procurement and business intelligence systems, providing retailers with real-time information to manage their business. E-POS software makes it possible for businesses to ensure that they are fully operational at all times and that all of your staff’s repetitive POS tasks are as streamlined as possible. The modern E-POS Systems are a retailer’s eyes and ears on their business.



Global Considerations

All this technology and infrastructure are great, however if you are an E-POS provider or distribution company in a developing or third world country you don’t have the luxury of a reliable infrastructure or modern high speed technology. Across the globe, almost all telecommunications products and services are prepaid; there is no distinction between a prepaid and postpaid consumer.

Most developing nations are not installing a wired infrastructure for telecommunications; instead they are rolling out cellular and cellular data networks that are being met with open arms by the consumers in these countries.  The cellular and “over-the-air” networks are being installed for two reasons. Some third world countries are very poor, so materials such as copper phone lines don’t survive long. As communications speed up and new technology becomes available, wireless communications are much easier and cost effective to deploy.

However, this leaves the E-POS with choices to make, the point of sale must be connected to the host via the most reliable, cost effective and fastest network available. Most foreign providers are choosing cellular data protocols to connect the remote location to the headquarters. Two of the most widely sought protocols are GSM and GPRS.



Cellular Connections

One very usable technology for connecting E-POS devices is Global System for Mobile communications (GSM), the most popular standard for mobile phones in the world. The GSM Association estimates that 82% of the global mobile market uses GSM. Over 3 billion people in 212 countries use GSM.  The nearly worldwide availability of GSM makes it a likely candidate for use as an E-POS system. GSM is a second generation (2G) mobile phone system. Since both signaling and speech channels are digital, data communication is easy to incorporate into the system.

Gil Barzeski, Project Manager at E-Time System (ETS), said, “In today’s marketplace it is easy to move forward with new technology and we are always striving for the best of breed solutions. However, in third world countries poor infrastructure cripples providers and distributors who are not willing to examine 2.5G Networks.”

He added, “ETS has converted our E-POS system to work with these standardized technologies and fit the customer’s requirements with a configuration that will fit future infrastructure changes.”

The ubiquity of the GSM standard has been an advantage to both consumers (who benefit from the ability to roam and switch carriers without switching phones) and also to network operators (who can choose equipment from any of the many vendors implementing GSM). GSM also pioneered a low-cost alternative to voice calls, the Short Message Service (SMS, also called “text messaging”), which is now supported on other mobile standards, as well.

Max Truax of TeluCom, a master distributor of Telular products, confirmed the viability of GSM as a transport mechanism for E-POS. “As a distributor of Fixed Cellular Terminals, often referred to as Cellular Gateways, our experience has been that GSM is progressing along with a multitude of technologies,” said Truax, “confirming its functionality and giving every indication it will continue to be the Cellular technology providing the connectivity for many and varied solutions.”

General Packet Radio Service (GPRS) is a packet oriented Mobile Data Service available to users of GSM. It provides data rates from 56 up to 114 kilobits per second.

GPRS can be used for Wireless Application Protocol (WAP) access, Short Message Service (SMS), Multimedia Messaging Service (MMS), and Internet services like email and web browser access. GPRS data transfer is typically charged per megabyte of traffic transferred, while data communication via traditional circuit switching is billed per minute of connection time, independent of whether the user actually is using the capacity or is in an idle state. This is only one of the reasons that GSM and GPRS are so widely sought after in relation to connectivity options. GPRS is a best-effort packet switched service, as opposed to circuit switching, where a certain Quality of Service (QoS) is guaranteed during the connection for non-mobile users.

2G cellular systems combined with GPRS is often described as “2.5G”, that is, a technology between the second (2G) and third (3G) generations of mobile telephony. It provides moderate speed data transfer, by using unused Time Division Multiple Access (TDMA) channels in, for example, the GSM system. Originally there was some thought to extend GPRS to cover other standards, but instead those networks are being converted to use the GSM standard, so that GSM is the only kind of network where GPRS is in use.

These standards, accompanied with new forthcoming technology, are proving that regardless of the provider, distributor, product or methodology - the circuit used to conduct the transaction is the single biggest commonality that all E-POS systems have, and regardless of how the transaction is settled, the fact is that the circuit must be present to conduct the transaction and support the exchange of information between the E-POS location hardware and E-POS Network Host.

With the variety of wireless connections now available to E-POS devices, the spaghetti bowl behind the retail counter may soon be a thing of the past.



Bruce Burke is Vice President of Marketing and Sales for PayZone North America. He can be reached at 727.612.5775 or via email at bruceb@payzone.biz.