Authorize.Net Focuses on Selling IP Expertise for ‘Non-Traditional’ Devices

After a year of trying to sell itself as a transaction gateway for brick-and-mortar merchants, Authorize.Net Corp. says it has learned one important lesson: when it comes to the point of sale, any Internet-enabled device is capable of being a POS terminal. As a result, the American Fork, Utah-based processor, which has historically provided gateway processing to online merchants, is aggressively promoting its IP expertise and looking for high-growth opportunities in mobile devices, kiosks, and other so-called non-traditional POS markets. Indeed, the company has gone so far as to replace its longstanding tag line, “Where the World Transacts,” with “Your Gateway to IP Transactions.” And the best growth potential, says Roy Banks, president, lies in devices such as cell phones, PDAs, PC-based virtual terminals, and ticketing machines. “That's where the market is growing for IP,” he says, contrasting such devices with traditional POS terminals, which he predicts will be increasingly displaced by non-traditional devices. “Their product life cycle is on a faster track than the traditional POS terminal,” he notes. Banks says interest from companies that enable non-traditional devices for payment has helped Authorize.Net exceed the plan it formulated a year ago to break into the market for physical-world transaction processing (Digital Transactions News, April 22, 2004). Of the 113,000 merchants the company serves, “several thousand” are card-present retailers or vendors, Banks says, up from around 200 a year ago. He has put together a business development group to focus on non-traditionals, but says many are coming to Authorize.Net on their own. Such companies, he says, also see an advantage in certifying once with Authorize.Net to gain access to multiple back-end processors. Authorize.Net, which was acquired early last year by Burlington, Mass.-based Lightbridge Inc., also relies on some 3,000 independent sales organizations and other resellers. Banks sees especially good opportunities among cell phone makers and mobile-phone networks, both of which are looking for new markets and have begun to eye the business of handling transactions for mobile merchants. The carriers, he says, now make most of their money from data rather than voice transmission, and the handset makers need new markets now that most people carry a cell phone. IP-enabled payments, he says, is a natural fit for them. When they get serious, Banks says, Authorize.Net will be ready. “We're the 'Intel Inside' when it comes to payments,” he says.