hat do a leading car rental company and a leading terminal manufacturer have in common? Both try harder. However, one clearly has impacted the payment-processing industry more than the other. "We came up with an idea to bring a lower-cost, smaller-footprint and higher-performance device to market. This was the turning point for Lipman," says Mony Zenou, President/CEO of Lipman USA.

That turning point came in the early '90s, but it wasn't easy to get there. "It didn't take off immediately," Zenou says. "There were three or four years of very difficult work. We made errors and learned lessons the hard way."

As a wholly owned subsidiary of Lipman Electronic Engineering, Ltd. (listed on the Tel Aviv Stock Exchange under the symbol LPMA), Lipman USA evolved from an Israeli electronic engineering and communications company into a separate entity focused on the POS market.

Its evolution began in the late '80s with a project from Discount Bank of Israel to create a POS-like device for tellers to use to record banking transactions. The original product was a consolidation of a cash register and POS terminal. It was a success, and Lipman Electronic Engineering then made the decision to bring this technology to American shores. That first device was the NURIT 2050, and Lipman USA was established.

For the next few years, Lipman USA struggled to find its niche while competing with established manufacturers. Then, in 1996, Lipman introduced the NURIT 2070. Although it was large compared to today's standards, it still was half the size of what other manufacturers were offering. It had a built-in battery and antenna. It proved to be the right solution for Lipman.

"It took us strongly into a recognition level with processors, and that's when we started to get notice from the industry," says Zenou.

Zenou says Lipman's business strategy focuses on two issues plus a key differentiator:

• Reliability: "Our number one philosophy is reliability because we can't afford to make mistakes. We had an incident in 1995 with a loose connector that nearly took us out of the game. While it wasn't anything major or fundamental, merely a production-line problem, we saw how the industry would not be tolerant of any newcomer. Today, our line averages less than 15 basis points failure."

• Flexibility: "We created a platform that enables us to go backward to existing models and forward to new terminals we are building. Our source codes are always compatible with old and new products. Our terminals look the same, have similar keyboards, but what makes the difference is the value we add to every terminal with sophisticated software. That helps us maintain our customers. We are very proud to say, 'We're not the cheapest in the industry, but we don't lose customers.' That means our product is strong, the value is high and the demand is high."

The differentiator - commitment to adding value: "We have become even more pioneering in our efforts, truly innovative. We go to areas other people are not willing to explore or invest in. We are willing to invest in solutions our customers want. They ask for something and we say, 'Give us the chance to build it for you.' We are allowing ISOs to control their destiny by providing them software to complement our products."

Those areas include check truncation, wireless capabilities, signature capture and Web-based solutions.

According to Zenou, Lipman recently was ranked as the No. 1-valuated POS company in the world. Zenou says that 60% of all ISO terminal sales in the U.S. are Lipman. Lipman reported a 27% in growth in the last year and owes it all to its solutions, platform and approach to customer service.

Those customers are both wireless and landline centric, with 75% of its sales shifted to landlocked merchants with fixed wireless needs. One of its hottest new offerings is the NURIT 3020, a continuation of the 2085 line with modifications for a smaller footprint. It showcases advanced embedded features including a high-speed modem, larger memory, smaller size and graphic display.

"We originally thought that in the U.S. bigger was better," Zenou says. "Apparently, the taste of clients is becoming more European, more dynamic, smaller and rounder. So now we have designed a new product with more application, more storage, fast modem encased in a smaller footprint."

While the focus of the 3020 is the larger independent sales agent or processor, the ISOs and distribution channels remain at the forefront of the success of the 2085 line. With the 2085 as well as 3020, Lipman offers terminal recognition with a private-label program that complements the solutions tied in on the back end, such as signature capture and check truncation.

"We are enabling users to save substantial dollars while allowing us to upgrade and offer much richer software apps to our terminals," says Zenou. "It's the same logic as always, but this time we tie in more and brand it."

For the smaller ISOs, the NURIT 3020 is the solution Lipman hopes will ensure their continued loyalty.

"We asked ourselves, 'How do we get companies like NPC and Vital, who purchase thousands of units a year, not to jeopardize our core ISO business?' " says Zenou. "The answer was simple: Sell a different product with similar features so the small ISOs can play in the game, too. In fact, as our current products become even more widely available, Lipman will introduce their successors, such as our 8320 Secure and 8085 ATM interface with one ARM-based processors.

The 2,000 ISOs that Lipman works with enjoy a myriad of benefits. Lipman offers a simple buy rate for its terminals. According to Zenou, the difference is that each Lipman terminal is enabled with prepaid services, loyalty and gift card and back-end services such as NURIT Capture and NURIT Store Manager.

Depending on the environment, Lipman will customize its terminals to meet the needs of its ISOs. All apps are modular, so Lipman can maintain one source code, one platform and one operating system. Lipman also enjoys across-the-board Class A certification status with all major hosts.

Other benefits include rapid shipment of equipment. Since 9/11, Lipman has warehoused three to four months' worth of inventory. Then there's Lipman's training services and support. Various training tools, including CD-ROMs as well as hard-copy docs, are available. Web-based training is as common as teleconferencing and on-site servicing. Support is ongoing from a dedicated group staffed just for resellers' needs.

"ISOs are looking for revenue, reliability and simplicity," says Zenou. "Whatever and whenever their need, Lipman can provide it. We anticipate the needs of our ISOs and processors and often survey them on their needs."

Another ISO benefit that Zenou is keen on is the cost of ownership. "It costs ISOs less if they don't have to service their terminals. Ours are easy to maintain, easy to service. If you manage a portfolio of hundreds or even thousands of terminals and they don't break down, then that's one less worry for our customers."

He adds, "We treat ISOs not just as salespeople selling product but as pioneers. They are the true entrepreneurs of this industry. Lipman is an ISO company. This industry has become a very ISO-spirited industry. There is no doubt today that the driving force behind the processors are ISOs, and Lipman is very influential to a large portion of those ISOs.

"ISOs come in different flavors, but it doesn't matter. Some shoot for price strictly. We simply need to work harder to convince them the value is there past the price. We are predominantly working with ISOs who are looking for value, stability and continuity and recognize that we are the company who supports that approach. Those are the ISOs who are great Lipman customers."

Lipman recently introduced yet another program to keep its ISOs happy. It's appropriately called NURIT VIP, as in Value Incentive Program. Lipman recognized the problem facing the industry with prices decreasing and margins shrinking. Another issue was maintaining feedback from all of those feet on the street, keeping in constant communication with its ISOs and rewarding them for their loyalty. How could Lipman give them a tool to enable them to feel positive at the end of the day? The answer was NURIT VIP on MyNURIT.com, a business portal to support its unusual incentive program.

"MyNURIT.com is a full logistic management of terminals from start to finish, all Web-based," says Zenou. "Most important for us was to start with an element of reward for loyalty, showing our gratitude for customer retention. We wanted to make sure that the benefit of providing this program was free terminals, gifts and dollars.

"ISOs can log in and get direct compensation and reward to their place of business through points. The program involves Web training, updates, surveys and positive as well as negative feedback. We believe where the money is, the attention will be."

Lipman's NURIT VIP provides for points to be accumulated and redeemed for free equipment, prizes and cash conversion. It allows for various levels of compensation for agents, subagents and managers. Distributors as well can work with Lipman through this program and redeem points rather than drop prices. Customized incentive programs will be offered for different participants.

An added bonus for MyNURIT.com users is Lipman's new interactive training tool. Once logged into the portal, resellers will be able to obtain immediate, hands-on training for such devices as the NURIT 3020, the 2059i, the 2085 and the new NURIT 8000 wireless solution.

How do all these products, program and services translate to successful, solid and strategic sales alliances? Just ask one of Lipman's ISO partners, Cynergy Data, an ISO that forged its relationship with Lipman more than five years ago.

"It's been an amazing experience," says Marcelo Paladini, President/CEO of Cynergy Data. "One of the key factors in our relationship was Mike Grossman (Lipman's Vice President, Sales). He was a key in establishing that relationship. Until someone gets to know you, they help up to a point. Lipman took the time to get to know us, especially with Mike being in the same city. He is always open to suggestions and solutions to any problem. He got us short terms, saw we were reliable and extended those terms. All issues were worked out thoroughly to get them resolved."

Paladini continues, "When it comes to equipment sales, we recommend Lipman because they are very user-friendly and easy to operate from a merchant standpoint. There are less keys, making transactions less confusing. From my perspective, that's a key factor."

Another strong Lipman alliance is found with Infinity Data, an ISO based in Brockton, Mass. "We've been working with Lipman since 1996, and it's been the best thing," says Brian Mills, President of Infinity Data. 'They're great people to work with as far as having product availability. We enjoy a very good relationship. As for the products themselves, regardless of the relationship, the best feature is how easy it is to train merchants. They're easy for merchants to use. Servicing is just as easy.

"Ninety-eight percent of the products we sell are Lipman. We have tried others on and off and always come back to Lipman. The terminals are fantastic. Issues are easily dealt with at their help desk because of the nature of their terminals. Programming is easy. Downloading is easy. I can't remember hearing any negative comments from our merchants."

Lipman recently signed a big deal with another major industry player, Concord EFS. "Their commitment is above and beyond," says Kevin Smith, Senior Vice President of ISO Sales and General Manager of Concord Payment Systems.

Lipman also boasts profitable partnerships with such other companies as Global Payments, MSI, Lynk and U.S. Wireless Data. Then there are providers such as Interlink Electronics for signature-enabled transactional services, RichSolutions for signature and check-retrieval services and APRIVA and U.S. Wireless Data for complementary gateway solutions.