Here Come the POS Web Terminals

With fraud and identity-theft headlines appearing nearly every day, the pressure is on to offer more risk-management services at the point of sale, and this, some experts say, is leading to rising interest in POS terminals capable of operating on Internet Protocol connections. Such connections, they argue, make it easier for merchant processors and independent sales organizations to bundle a variety of Web-based anti-fraud and other services and to collect more data at the time of the transaction. The need is pressing. About 3.4% of all U.S. consumers were victims of identity theft this year, up from 1.9% in 2002, according to a Gartner Group survey. “With identity theft on the rise, there's an increasing need to collect data in the context of the transaction,” says Gwenn Bezard, an analyst at Celent Communications in New York. Bezard estimates that 17,000 IP-capable terminals will have been installed by the end of the year, with the installed base rising to 80,000 next year and 250,000 in 2005. The devices, he says, will not only be capable of IP connections but will be using them. Estimates he's hearing from processors, he adds, indicate that 10% of all electronic transaction volume will be running through these connections by the end of next year. Typically, such connections now are set up at large retail chains, and involve central hubs with T1 lines from each location, not connections from each terminal.