My first exposure to the payments biz was in 1985 when I joined VeriFone. Visa and VeriFone partnered to bring the Zon Jr. (called the Visa Mini Terminal by Visa) to the market to replace the paper warning bulletins. Most people reading this probably do not even know what a warning bulletin was. The mag stripe was pervasive but most transactions were still processed by pressing the embossed numbers onto a sales drafts with a Zip-Zap machine with the merchant either dropping them off at the end of the day down the street at their bank branch or mailing them to some remote sweat shop for processing. It was a REVOLUTION spurred on by Visa's promotion of a low cost terminal and an interchange incentive called TIRF (Terminal Interchange Reimbusement Fee) to get an electronic authorization followed about three years later by yet another REVOLUTION called EDC (Electronic Draft Capture).
Here we are 24 years later and while much has changed, the Mag Stripe (thank you Jerome Svigals) is still the predominent form of payment card, at least here in the good old USA.
I predict that when President-elect Obama is replaced by the next president in 2017 that will still be the case, albeit waning by that time. What do you think? Will it be Chip Cards? Will it be RFID? Will it all be replaced by our mobile phones acting as payment cards or devices?
Wednesday, January 7, 2009
Since the beginning of CNP (Card Not Present) payments, this response coming back from the Issuer has always provided both confusion and entertainment. For those new to the anomalies of processing a credit card, seeing a message like this can be very frustrating. Once you have been around awhile you realize this is just another little indicator that for the most part the underlying credit card processing systems are all geared toward face-to-face Card Present transactions. While CNP overall which includes MOTO (Mail Order Telephone Order) and eCommerce now represents something like ~15% of total credit card sales, if you recall back at the dawn of ecommerce and listened to the pundits, by now all shopping would be done online. Well, like with most things, it is evolution, not revolution. Ecommerce faired better in 2008 than retail, but was not immune from the crisis and while this channel will continue to take more and more share, for a very long time to come the majority of transactions will continue to be done face-to-face. p.s. Once they figure out how to "transport" your meal through the Internet, I guess the % would rise exponentially since restaurant spending on credit cards is such a significant % of the total!!!