Card swipe just got faster

It was only last year that McDonald's, the world's largest fast-food restaurant chain, started accepting credit cards in the US. Reason - their policy is to serve customers in a specified time.

The new payment terminal technology has, however, brought down the transaction time and cost significantly than the earlier dial-up technology.

Already being used in North America and European countries, the new DSL-based card payment technology will soon be introduced in India, by the Bangalore-based Innoviti Embedded Solutions.

Innoviti, an IT product company that delivers consumer wireless products, has partnered Verifone Holdings, a global provider of technology for electronic payment transactions, to bring the technology to India. Verifone has a market share of about 54 per cent in the electronic card payment market in India.

The traditional dial-up technology for credit card transaction takes no less than 18 seconds as for every credit card transaction, a telephone call is made to the telephone exchange.

This in turn connects to the server in the acquired bank. For every telephone call made towards card payment, the merchant or the outlet is charged Rs 1.20 or 0.80 paisa, the minimum per unit charge.

A large retail store like Shoppers' Stop with at least 12 counters, gets 1,200 customers a day on an average. This at the lowest of 0.80 per call costs Rs 28,000 per month, just for paying the bill towards making telephone calls.

The digital subscriber line connection is however independent of the number of transactions and unlike the dial-up, a single DSL line can be shared by multiple terminals, with the transaction time coming down to just three seconds.

The bill per month on an average towards single DSL line charge is about Rs 500 per month, which is at least 50 times less than the dial up charges.

In the DSL connection, terminals (for swiping) in the merchant's location will be connected through the Ethernet to a router and the router will be connected to a DSL modem. The DSL modem is connected to the Internet through a single DSL line provided by the telecom operator.

"This is not only faster, but is also cost-effective. At a time when the retail sector in the country is seeing a boom and the customers not only in the metros, but even in B group and C group cities are preferring credit card or debit card than carrying cash, this will not only reduce a significant amount of transaction time, but also cut the merchant's communication cost significantly," said Rajeev Agrawal, CEO, Innoviti Embedded Solutions.

The new card payment technology is presently under trial testing at a few hotels, petrol bunks in Bangalore and Mumbai. The company plans to launch the product in India, in the next five-six months, Agrawal added.

"We are targetting primarily key verticals like hospitality, organised retail, core banking and petrol stations for the new product," said Kaushal Singh, vice president, operations & business development, Innoviti.

Innoviti which was founded by four IITians including Agrawal and Singh in late 2002, had recently been awarded a US patent for Vaayu, its travel wireless adaptor for global roaming users who need Internet access while travelling.

The payment solutions market in India is valued over Rs 200 crore (Rs 2 billion) and is growing around 60 per cent per annum.