Merchants may feel overwhelmed at the abundance of new payment technologies, and they are understandably worried about investing in the wrong one. Terminal vendors are hoping to address those fears by mixing all of the possibilities into one piece of hardware.
Chase Paymentech Solutions LLC illustrated this strategy most clearly with its decision to brand its terminals from Ingenico SA as "Future Proof," but it is not alone. VeriFone Systems Inc. has used similar language in its own sales pitch.
Dallas-based Chase Paymentech, a payment processor unit of JP Morgan Chase & Co., makes no mention of advocating a specific technology over another.
Rather, the main goal for Chase with the Future Proof terminal is "to help businesses grow and expand by accepting the latest forms of customer payments," says Robert Nadeau, group executive for product development at Chase Paymentech.
Paris-based Ingenico manufactures the iCT250 terminals, which Chase has loaded with proprietary software, Nadeau says. The terminal's software applies automatic updates to keep it compatible with emerging payment technologies.
Chase seeks to give merchants the ability to reduce fraud and grow their transaction volume with a terminal accepting all developing technologies, Nadeau says.
The terminal will accept the EMV smart card, Near Field Communication, radio-frequency tap-and-go, or software-application powered mobile wallets. It will handle chip-and-PIN or chip-and-signature payments, as well as transactions initiated by mag-stripe cards.
Chase isn't disclosing the number of terminals it plans to distribute, Nadeau says, but the bank plans to make them available through any of its 5,300 branches or the chasepaymentech.com website.
Though Chase's initiative may be a first for a processor, a "future proof" terminal isn't an entirely new concept in the industry. Other manufacturers have established terminals that are capable of accepting all forms of payments. Manufacturers also upgrade software or add hardware devices to older terminals to accept new technology.
Indeed, terminal makers watch newcomers in the field closely and, in some cases, acquire new technology companies as needed to strengthen market positions.
For example, terminal maker VeriFone, out of San Jose, Calif., has often touted "future-proof" features in their products, says spokesperson Pete Bartolik.
"Our approach is to not only provide the hardware capabilities, but more importantly, the services necessary to keep up with the constant updates and change that will take place in the market as new capabilities and requirements come online," Bartolik adds.
All terminal makers are making efforts to "stay relevant" because it is widely known in the payments industry that anyone can use a mobile phone, tablet and reader device to conduct a contactless or card-swipe payment, says Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup.
"Any new terminals have to integrate all of these options," Riley says.
Chase's strategy emphasizes the idea that merchants will benefit if issuers and terminal manufacturers get new devices into the U.S. market to meet the Oct. 1, 2012 deadline set by Visa Inc. for merchants to accept chip-based cards, Riley suggests.
"We won't see a complete transition to new terminals by that October deadline," Riley says. "Some merchants will continue to take their time."
To further ease the transition to new technology, Chase offers "time-based promotions" whereby its terminal is free to new merchant customers, Nadeau says. "We are also considering promotional pricing in certain channels during the early phase of the terminals introduction."